The aviation industry’s most recent financial performance statistics have been startling. In 2020, COVID-19 caused the world’s airlines losses of $370 billion directly, with airports and air navigation services providers (ANSPs) losing a further $115 billion and $13 billion, respectively (ICAO 2021)
Despite these losses – and the looming future costs of decarbonisation and climate change mitigations – the importance of the aviation sector to the world economy is undiminished. Airports are powerful economic hubs, vital business communities created by the airport, airlines, staff, passengers, infrastructure providers, baggage handlers and the surrounding residents. They are often, in effect, micro-cities. As recovery begins, many in the industry are wondering if airports need to revisit their business models and build resilience through diversification of role and function.
Changes ahead and above
In late June 2021 the UK aviation industry launched its first interim decarbonisation targets, signalling a strengthened commitment to achieving net zero. The headline goal of ‘net zero’ brings with it a variety of related changes, from operational practices, to physical infrastructure to the need to provide services in new ways. Decarbonisation is in reality an opportunity to revisit the airport business model. COVID starkly demonstrated the need for diverse revenue streams, and decarbonisation and new technologies open up opportunities to think creatively and build improved resilience into business models.
A diverse group of factors are reshaping the business environment for airports: decarbonisation, new aviation fuels, the transition to renewable energy, growing role as multimodal hubs, their role as employers and members of wider local communities. If business resilience isn’t just about the capacity to manage risks, but having the capacity to adapt to long-term change, the sector needs to connect the dots between these different priorities, risks and opportunities.
Let’s examine a few ways airports can improve their resilience.
Become a renewable energy generator
In the next decade, demand from electric vehicles (EVs) parking will increase significantly, potentially dwarfing current building energy demand. Therefore, investment in on-site solar PV over suitable buildings, car parking canopies, and on land, in order to generate sufficient energy, provides the opportunity to produce much-needed future energy and provide a future source of revenue.
As EV demand rises this also opens opportunities for different business models to generate revenue. This includes passenger rapid charging hubs with the potential to serve all charging types and needs including fleet, "gas station" (one for passengers and one for fleet) which opens other retail opportunities such as coffee shops and meeting venues), a passenger charging service for meet and greet/drop and go charging as premium valet service.
Although the shift from kerosene to a full decarbonised aircraft industry will require years of research, development and production, we can already see the trend lines pointing towards a more diverse range of power sources within aviation. For airports this will require future capital investment to build the fuelling infrastructure for shorter range electric and hydrogen powered aircraft as they commercialise and scale, possibly as soon as 2035.
Current technology favours hydrogen for planes, but there is obviously plenty of time for this to change. Hydrogen infrastructure will need to be planned from scratch, maintaining net zero operation across a completely new supply chain. This could require hydrogen to be brought into site from local plants or if possible, to be generated on site, enabling the airport to become a supplier to other consumers such as bus companies or freight operators.
Offer new transport services
Aviation isn’t the only industry facing change. Road transport is being reshaped by both the need to decarbonise and new technology like AI and machine learning. For airports the eventual appearance of driverless vehicles or autonomous ridesharing could be a threat to their traditional parking revenue. However, there are ways that the airport can stay ahead of this trend. Airports could invest in their own autonomous vehicle fleets or offer a charging depot for new EVs or hydrogen powered buses and trucks.
As a decarbonised multi-modal transport hub that enables the colocation of business services/energy services, the future airport can widen its role and revenues. This could include last-mile drone deliveries, an energy hub, an autonomous vehicle fleet servicing centre, or a circular economy hub that would match partners for materials ensuring reuse of materials - for example, the airport could connect a business that is removing ceiling tiles with one that requires ceiling tiles, ensuring recycling and reuse of material components.
Change is in the air
As the race to meet national and local net zero targets focuses minds in boardrooms and government agencies alike, airport leaders will need a willingness to embrace the unfamiliar. The adaptive capacity to deal with the kind of future challenges and opportunities presented by climate change is only achieved by thoughtful planning and flexibility. Airport leaders will need to be open-minded and imaginative as they develop business plans that can produce the sustainability and resilience the sector depends on.
Accelerating the journey to net zero transport
New business models, new technologies, new policies, new sources of power – the transport industry is changing rapidly. From hydrogen trains to walking plans for tropical cities, from timber stations to city-scale low emission zones, from electric bus fleet conversions to low-carbon airports – Arup is helping to drive decarbonised transport in all its forms.
What makes a sustainable airport?
The push for action on climate change challenges different sectors of our economy in different ways. For aviation, there are two clear priorities – the shift to sustainable aviation fuels, a transition that’s a work in progress, and second, the need to develop sustainable airports.
The future of mobility: Urban air
As new aircraft solutions are developed; quieter, electric-powered vehicles come into service; and operators and developers start laying the foundation for a network of vertiports, cities must start defining their role and relationship to this new transportation modality before it’s too late.