Airport Facilities and commercial benchmarking

Airports globally are facing unprecedented demand and growth. Coupled with passengers’ increased ‘level of service’ expectations and demands, this means that terminal building designs need to catch up or face becoming obsolete. Ashley Morgan, Associate Director, Aviation at AECOM, explores the key issues to consider when increasing airport capacity and the importance of cost analysis and benchmarking.

Current situation In the Middle East

Across the Middle East new aviation hubs are being developed and existing facilities upgraded to meet a projected increase in global and regional passenger numbers. Further, airport operators are seeking to establish their hubs as the preferred facility for passengers to travel through by enhancing connectivity passenger experience.

Development Considerations

The design and construction of new airport facilities must consider anticipated passenger growth forecasts and the enhanced level of service that passengers increasingly expect.

The ability to future-proof the design to accommodate technology advancements must also be a key consideration.

Importance of cost analysis and benchmarking

Clients are increasingly understanding the importance of benchmarking their development programme and aspirations with competing developments to ascertain capital cost expectations at differing levels of detail. Cost analysis of comparable aviation data is increasingly seen as essential in driving value and identifying key cost drivers inherent in the design of airports.

Airport facilities

Global airport passenger traffic is expected to double by 2035, according to the recent report titled Airport of the Future, from the International Air Transport Association (IATA). With the report also noting that 45 of the world’s 100 busiest airports already have capacity issues, there are major changes and development required.

While the Middle East experienced its slowest airline passenger seat growth for over a decade in 2018, it still grew above the global average. While international capacity, which is estimated to account for 84% of the 2018 total capacity, is said to have grown by only 2.8%, the capacity is estimated to have achieved a much larger 9.4% growth in 2018. Whilst below that of 2017, this does confirm the trend that Middle East air travel continues to grow, thereby placing continued pressure on the Middle East’s aviation infrastructure and terminal capacities.

This Middle East regional growth has coincided with the transformation of Saudi Arabia’s Saudia Airline in a newly-liberalised marketplace. It has accelerated international growth at the parent, full service, brand and has been using its new low-cost carrier (LCC) subsidiary ‘flyadeal’ to accelerate growth in the domestic market, with LCCs in the Middle East said to have experienced 12% growth in seat capacity in 2018 alone.

The U.A.E. growth has however been relatively flat in comparison to the Middle East as a whole, with some in the market predicting that it will flatten further proceeding into 2020.

IATA however, has suggested passenger traffic in the Middle East may grow by 5% per year when considering the 2019 to 2024 outlook.

So, is the pressure on?

Terminal and runway capacity are directly related. However, a vast terminal with the ability to hold large numbers of passengers will not be financially viable if the carriers cannot support it. A terminal’s relationship with its apron in terms of distances between aircraft and their stands and bridges will dictate the speed at which carriers can seat passengers and depart.

This directly correlates with passenger levels of experience and satisfaction. An airport’s runways and taxiways infrastructure account for a substantial portion of its capital expenditure, but more importantly are typically its most significant capacity constraint.

Globally the top five busiest airports saw passenger volumes in excess of 83 million, with a 7% increase in passengers and 7% increase in cargo in 2017 alone. Airports around the world have therefore had to look at developing robust capital investment plans to cater for increasing demands.

To understand the challenges that airport operators face, we also need to understand what capacity means for an operator. While a growing number of passengers may meet an operator’s target, the number of passengers that can pass through a terminal is dictated not only by available space, but also by the importance of maintaining health and safety and meeting strict security protocols, along with baggage handling efficiency, passport immigration and welfare facilities.

Current situation in the Middle East

With Abu Dhabi’s Midfield Terminal Complex nearing completion, and the planned Al Maktoum International Airport expansion in Dubai under development, aviation competition remains strong in the U.A.E.

The U.A.E.’s neighbour, Saudi Arabia, has aviation expansion firmly in its sights as it seeks to stimulate and diversify its economy and transform the Kingdom into a tourist destination and global hub connecting Asia, Europe and Africa.

Elsewhere in the Middle East, Kuwait International Airport opened Terminal 4 in December 2018 providing for an additional 4.5 million passengers per annum (MPPA) capacity to expand their operation to 25 MPPA by 2022. Earlier in 2018, the new passenger terminal at Muscat International Airport opened, providing the Sultanate the capacity to handle 20 MPPA, with plans in the pipeline to increase capacity further to 48 MPPA. Bahrain is additionally set to begin the soft opening of their new passenger terminal in Q4 2019, boosting their capacity by 14 MPPA.

Aviation fleet mix

The aspirations around routes and ease of travel for passengers continue to influence the type of aircraft deployed by airlines and will have subsequent impacts on the facilities needed in new and existing airport developments. This could be in relation to the specification of runways, contact stand types and numbers and passenger boarding bridge numbers — all of which are assets that can and will impact capital and operational costs and therefore need to be carefully considered.

Fleet mix selection can not only change the trends in passenger travel but also provide additional revenue for airlines through more expensive tickets and reduced landing charges if no stopover is required.

The Airbus versus Dreamliner debate has taken centre stage in recent years when airlines have been reviewing their fleet mix, particularly within the Middle East where Airbus has its strongest customer base. However, this potential headache for airlines and airport operators alike was effectively ended in February 2019, when Airbus officially announced it would be ending production of the Super Jumbo A380 by 2021, a decision which looks set to change the fleet mix of some Middle East airline operators over the next decade.

Low-cost carriers (LCC)

The increasing popularity of budget airlines globally is contributing to the growth in global passenger numbers. Within the GCC the likes of Dubai, Sharjah and Jeddah airports have aligned to this trend and increased their LCC offering through Air Arabia, FlyDubai and flyadeal respectively.

It is a model that attracts passengers due to the low-ticket prices and variety of routes that are often offered to and from regional airports and allows the operators to achieve maximum throughput from minimal operating costs.

Airlines often drive decisions for airport owners and operators as they determine passenger profile and expectations of the level of passenger service. As such, operators are required to streamline the passenger journey through automation and smart technology.

The budget airline operating model has contributed to smart initiatives being implemented across terminals globally such as: remote check-in; passenger bag-drop bays; automated gates to security and in passport control/immigration; and increasing departure security bays. All these initiatives improve throughput, while maintaining a safe, secure and pleasant experience, and have an impact on construction designs and capital costs.

Smart technology

To meet ever-increasing passenger demands, level of service aspirations and increased regulations, airport operators are embracing smart technology more than ever and are continually developing and trialling new technologies to improve travel time for passengers, from the minute they set off from their home until they leave the runway. The process of moving passengers through an airport needs to be secure, seamless and quick, while still offering a positive experience.

Within the Middle East, Dubai continues to showcase its appetite for innovation and smart technology, with the annual Dubai Airport Show showcasing the considerable breadth of new and available technologies; from autonomous vehicles, autonomous baggage handling solutions, artificial intelligence, 3D security screening to smart passenger apps, all designed to increase passenger experience and reduce travel times, whilst increasing the operator’s ability to remain flexible in the pursuit of meeting their customers’ ever changing demands.

Whilst domestic passenger growth in certain parts of the region may presently be said to be flattening, aviation within the Middle East appears to have a positive outlook as we enter the coming decade. The ever-improving technological advancements, increased passenger level of service demands and the evident strong competition between Middle East aviation developments provides for an interesting landscape for the future of Middle East aviation.

Development considerations

The design and construction of new airport facilities will need to consider anticipated customer growth forecasts and the increased level of service expectations, whilst taking into account technology advancements and improved speed of passenger throughput, with suitable designs ultimately impacting terminal facility sizes.

Meeting passenger experience demands and operator aspirations

Focus will be on meeting passenger demands and operating capacity whilst providing the best level of passenger experience at every stage of the journey. There is a move to make the journey more efficient, with smart technology giving direction and information to passengers as they move through the airport process, or even ahead of this in the case of delays and cancellations to their flights. Commercial initiatives aim to bring in this technology, including enabling passengers to be notified on devices of buying opportunities.

Related to this is the challenge for designers to provide the space and efficiencies for fast security clearance for passengers when enhanced security requirements are in operation.

The aviation body IATA’s Level of Service concept sets out the requirements of airport facilities, namely passenger terminal buildings and how airport operators can achieve these increased level of service offerings within their own developments. With increased competition globally, operators are increasingly aspiring to be best in class, which ultimately drives design decisions for new and upgrading of existing assets.

Electrification and autonomous vehicles and processes

Many airport operators are thinking ahead to the day when most airside vehicles and equipment will be electrically powered. Monitoring of every vehicle on the airfield through GPS is already commonplace and will be used increasingly.

New initiatives such as intelligent autonomous vehicle technology will replace the need for fixed conveyors and sorting systems. For example, enabling automated ‘pods’ to move between fixed drop-off points to collect and offload baggage would mean that they can determine their own optimal route through an airport. This provides the airport with a flexible system, operational certainty, and a reduced footprint of conveyor systems that reportedly use 50 per cent less energy; thereby potentially reducing terminal building areas due to the reduced conveyor need and improved space efficiencies through better front of house (FOH) versus back of house (BOH) ratios.

Pre-built modular monitoring and screening rooms that can be easily moved to suit demands can offer flexibility over space usage and layout. Automated tray-return systems, auto diverters and parallel spot checks also enhance efficiency and speed up the process for passengers. This additionally means that remote inspections and more efficient searches can be carried out away from security scanning areas to reduce waiting times and delays, which can further reduce overall terminal space requirements.

Smart technology for the smart airport

With the ever increasing up take of smart technologies and the push towards becoming a smart airport, airport operators and airlines alike are pushing forward with the implementation of new and innovative technology solutions to assist in streamlining and speeding up the passenger processing journey, as well as the real time management of the airport and its operations.

Key technology trends of 2019:

• Biometrics
• Self-service and automation
• Artificial intelligence and predictive software
• Blockchain
• Improved cyber security
• Onboard connectivity
• Robotic assistants

The implementation of biometrics, self-service and automation has the potential to directly impact the physical design of terminal facilities and their overall size, due to the potential ability to reduce the footprint of key areas within the terminal facilities for example within check in areas, due to the space saving nature of these technologies.

Further advocating the use of technology and smart airports is IATA. Their Global Airport & Passenger Symposium (GAPS) 2019 held in Warsaw, Poland, explored the impact of existing processes in the passenger journey and debated how future needs, trends and solutions will shape the way we travel.

The discussions focused on:

• Seamless journey: biometric technology
• Transforming airports: off-site processes, deployment of artificial intelligence and robotics
• World of interactive data: The real-time exchange of operational data.

With the introduction and application of increased smart technologies the key for airport operators will be to deliver improved passenger (and employee) experiences, whilst ensuring security is maintained and OpEx costs are ultimately reduced to cover off any increased CapEx costs.

Sustainable design

As well as future-proofing the design of airports to enable them to harness advancements in technology, many airports are pledging to maintain or even reduce their carbon footprint, despite their expansion plans.

These changes will require careful consideration of building services design, selection of construction materials, review of sustainable technologies and a wider consideration of the transport strategy to ensure that there is adequate public transport for passengers to travel to the airport and leave their cars at home. However, the sustainability-driven expansion of public transport options poses a dilemma, as in many cases car parking charges are a large revenue generator for an airport.

Construction considerations and opporunities

Airside environment

One of the major construction challenges that most airports face is how to carry out major works in an airside environment, where safety and security are paramount. Often airports are constrained in the areas and access they can offer for a construction compound. Where there is sufficient space to construct a logistics ‘hub’ to support a programme of works, this often poses challenges around management, security and cost. In any case, there is a need to ensure that construction equipment and materials do not contaminate or interfere with key airport systems or pose a risk to aircraft, or ultimately passenger safety.

Competition for resources

Another significant consideration, in the context of major infrastructure projects, is the availability and capability of resources to deliver large-scale airport projects that will be needed to meet capacity growth. Although not a challenge solely for the aviation sector, airport clients will compete for talent in both for their own organisations and within the construction firms delivering work, potentially driving up prices with the demand.

Modular construction

Modular construction techniques are being increasingly explored in the construction of airport buildings to achieve consistency, speed of construction and a high level of quality. However, it is not yet known if this will be a viable option for a complex terminal or pier. For example, when considering access and space challenges, there is a need to manage the storage and on-site installation effectively.

Revenue generation vs. capacity

Maximising revenue for airport operators remains a priority and while increasing terminal space may offer higher income, there is a fine line between the risks of overcapacity and the need to offer flexibility at peak periods. There is inevitably a trade-off between the two, for example, a 5 per cent to 10 per cent decrease in scheduled flights may be effective in reducing capacity, while also allowing an airport to recover from periods of construction disruption.

Airport terminals are designed to respond to the needs of both passengers and carriers and having the right balance will also drive revenue opportunities. Operators maximise retail offers by ‘snaking’ the passenger journey and providing open frontage to retail outlets, so that they are more available and inviting. Investment plans need to take these requirements into account when designing terminals for both short- term demands and future-proofing.

Another set of factors to consider in this balance are the environmental targets of many airports, which could mean additional capital expenditure and fall in ongoing revenue generation because of reduced car parking at the airport.

Development cost considerations

1 / Technology

New technology comes at a cost (installation, staff training and maintenance).

2 / Resourcing

Resource availability/competing developments/ procurement and supply chain demands.

3 / Design to budget

Requirement for clear client briefs and objectives, identification of key project drivers. Managing expectation of construction CapEx costs, whilst challenging designs throughout the design process ensuring expectations are aligned. Identifying clear construction methodologies, ensuring phasing and interfacing requirements are clearly considered.

4 / Planning

Managing expectation of project programme, ensuring sufficient time is allocated to front-end approvals and testing, commissioning and ORAT periods at the end of the construction period. Historically aviation projects over run due to their level of complexity and so early engagement by all airport and government stakeholders is imperative — early identification and agreement of critical path.

5 / Site management

The management of the works on site can add significant costs to a project through the need for screening of materials and construction personnel and movement between landside and airside environments. Phasing construction works to keep an airport operational can also lead to additional cost in contractors’ preliminaries and introduce risk of interfaces between projects.

Benchmarking

Clients are increasingly understanding the importance of benchmarking their development programme and aspirations with competing developments to ascertain capital cost expectations at differing levels of detail. Cost analysis of comparable aviation data is increasingly seen as essential in driving value and identifying key cost drivers inherent in the design.

Importance of cost analysis and benchmarking

Airport operators and developers are increasingly turning to cost consultants to develop budgets and cost plans reflective of their concept designs and aspirations, to determine early concept budgets for their proposed developments, as part of their quest for project funding. Through effective cost analysis and subsequent benchmarking of historic cost data the ability to derive meaningful analysis in varying levels of detail is key to providing clients with an early indication of their expected capital expenditure to meet their proposed development aspirations, as well as throughout the cost plan evolution.

Through this cost analysis; which RICS defines as: ‘… a full appraisal of costs involved in previously-constructed buildings …aimed at providing reliable information which will assist in accurately estimating the cost of future buildings. It provides a product-based cost model, providing data on which initial elemental estimates and elemental cost plans can be based.’ (NRM, 2009 p10)

Based on detailed cost analysis, the undertaking of aviation project benchmarking can be conducted in varying degrees of detail; project level, facility level, elemental level and component level, as shown below.

The level of information available for analysis and the stage at which the benchmarking is undertaken will drive the level of detail of the benchmark analysis. For feasibility and project funding objectives this often involves a Level 1 analysis at purely a project level a cost/m2 for the entire development based on some high-level design parameters, to derive an initial capital cost target.

Project and facility level benchmarking

When looking at project and facility level benchmarking to derive early budgetary advice for proposed developments there are several aspects that need to be considered.

Generic items for consideration:

• External design — iconic vs. functionality
• Interior design — e.g. achieving large, column-free spans to give open and bright spaces
• Interior finish quality and specification — product selection
• Internationally-procured equipment and materials (supply/demand issues, long lead times)
• BOH vs FOH — building functionality and efficiency
• Identifying key cost drivers early; time/cost/quality
• Technology — building for today vs. safeguarding for the future
• Passenger experience and the airport’s chosen level of service (LoS) (IATA)
• Procurement strategy
• Capacity — future expansion safeguarding.

By identifying the above considerations and reviewing the clients’ requirements against these, the data set becomes more suitable for analysis and any necessary normalisation, ensuring that the identified project is reviewed against projects of a similar specification and aspiration.

The table below identifies cost ranges and subsequent benchmarks for terminal facilities based upon MPPA categories, priced in USD and subsequently aligned with Middle East construction markets and applicable location indices.

When utilising benchmark data, such as the above, to produce an estimate it is essential to review the clients’ aspirations, proposed design and multiple other aspects as identified in the items for consideration above to determine where in the above ranges the proposed development will be expected to fall and should aim to be.

The use of benchmarks can be misleading when they are not truly understood and used incorrectly. It is therefore essential that they are read in conjunction with any caveats or exclusions that aim to provide context to the data presented, and these must be carefully considered and clearly identified when presenting findings to clients to enable them to understand the basis of the costs and benchmarks used and presented.

Elemental benchmarking

Through increased detailed cost analysis of aviation facilities and as the estimate evolves, there is the ability to undertake benchmarking at a deeper level, proceeding into Level 3 or elemental benchmarking of a given facility.

Undertaking elemental benchmarking allows for the increased potential of drawing more meaningful benchmark conclusions in relation to the proportional split of the key elements of the facility.

An example of such benchmarking analysis would be in relation to terminal facilities whereby the following elemental categories can be identified:

• Structure
• Envelope
• Interiors
• Services (MEP)/special
• airport systems (SAS)
• Preliminaries

Through elemental analysis of the terminal facility, it is possible to derive an average proportional elemental cost split from a range of similar aviation projects, which then enables the evaluation of a client’s project in a more detailed way throughout the cost plan evolution. It additionally shines a light on the elemental aspects of the project and cost plan that sit above or below the projected benchmark ranges — allowing the design and commercial teams to focus in on those aspects to ascertain the reasons for these differences, giving a further level of design verification and validation.

The average cost for each key element can then be benchmarked for terminal facilities which can then able to be expressed as a percentage of the facility’s cost/m2 as illustrated below.

Key cost drivers: Terminals

When analysing the data and reviewing new projects against these benchmarks it is necessary to understand some of the key cost drivers that are related to the above identified elements:

• Structure: Ground conditions, column-free spans to be achieved (structural grid), construction methodology, local building regulations.
• Envelope: Design complexity, such as iconic features that require a greater degree of bespoke fabrication, less standardisation, more complex interfaces and connections. Roof and façade specification, as well as wall to floor ratios.
• Interiors: Back-of-house to front-of-house area ratio, quality of finishes, retail and concessionaire fit out strategy, FF&E.
• MEP/SAS: Regional climate, security requirements, stakeholder requirements and shared information technology specialist systems.
• Preliminaries: Based on the above elements the preliminaries will be driven accordingly.

Additional parametric analysis and benchmarking

Through the process of detailed cost analysis and the subsequent benchmarking, the forecasted capital cost outcomes can be identified. Further the data can produce additional parametric data analysis such as determining the overall size ranges of terminal facilities. Through the benchmarking of aviation developments and the identification of key aviation metrics it is possible to determine an average or optimal terminal area.

This form of analysis can be conducted against key aviation metrics such as; terminal area per MPPA, area per gatehouse/contact stand or area per peak hour passenger (PHP), all of which provide an additional level of analysis against which operators’ development aspirations and designs can be challenged and effectively estimated and analysed.

These metrics additionally allow for high level feasibility estimates to be generated when a client’s MPPA is their only known parametric, and terminal size has not yet been considered or decided, enabling sound assumptions to be made around required terminal sizes to meet the client’s objectives. Overall, the importance of capital cost benchmarking cannot be underestimated throughout all stages of the project lifecycle, bringing numerous benefits to clients’ and their development aspirations.

At AECOM, our ability to be involved throughout all aspects of the construction process enables us to provide a completely integrated offering whereby commercial management including cost analysis and benchmarking goes hand in hand with design and engineering — thus assisting in the development of commercially-viable designs and developments, further ensuring that clients’ aspirations can be more likely realised.