Hub airports become economic dynamos

In 2014, the world’s ten busiest air­ports moved more than half a bil­lion peo­ple. For the first time the air­port with the high­est num­ber of inter­na­tion­al pas­sen­gers was Dubai Inter­na­tion­al with 70 mil­lion pas­sen­gers. It pushed Lon­don Heathrow into sec­ond place on 68 mil­lion, while Hong Kong came third with just under 62 mil­lion pas­sen­gers.

Lump in the next ten busiest air­ports as defined by inter­na­tion­al pas­sen­ger num­bers and alto­geth­er the top 20 moved in excess of 700 mil­lion peo­ple inter­na­tion­al­ly, rep­re­sent­ing more than one in every ten humans on the plan­et. Over the 12-month peri­od, half of these air­ports saw pas­sen­ger num­bers rise by more than 5 per cent and three – Bangkok, Istan­bul and Tai­wan – expe­ri­enced dou­ble-dig­it growth, accord­ing to Air­ports Coun­cil Inter­na­tion­al.

What most of these air­ports have in com­mon is they are hubs, offer­ing a high num­ber of routes and mov­ing peo­ple inter­na­tion­al­ly rather than nec­es­sar­i­ly being the final des­ti­na­tion. Prob­a­bly the world’s most notable hub, Dubai Inter­na­tion­al (DXB), expe­ri­enced a 6.1 per cent growth in pas­sen­gers in 2014, rais­ing its inter­na­tion­al pas­sen­ger man­i­fest to around 33 times its nation­al pop­u­la­tion. Last year DXB’s retail turnover was a stag­ger­ing $1.9 bil­lion.

Dubai also recent­ly opened Al Mak­toum Inter­na­tion­al, which will have five run­ways and capac­i­ty for 160 mil­lion pas­sen­gers a year when it is com­plet­ed. By 2020 it’s esti­mat­ed that avi­a­tion will con­tribute $53 bil­lion to the emirate’s econ­o­my, rep­re­sent­ing 37.5 per cent of GDP and sup­port 750,000 jobs.

Accord­ing to John Kasar­da, direc­tor of the Cen­ter for Air Com­merce at the Uni­ver­si­ty of North Carolina’s Kenan-Fla­gler Busi­ness School, Dubai has become the de fac­to hub for any­one in India or Africa, as well a lead­ing stop­ping point for those trav­el­ling between Europe and Asia. In his words, Dubai is a “glob­al avi­a­tion hub with a city-state attached”.

It’s also indica­tive of a trend that’s chang­ing the world, from the way peo­ple do busi­ness to macro-urban plan­ning. “Hubs are the routers of the mod­ern phys­i­cal inter­net that con­nects peo­ple and prod­ucts quick­ly and effi­cien­cy around the world,” says Pro­fes­sor Kasar­da, for whom hubs have become part the strate­gic busi­ness infra­struc­ture that will be even more impor­tant in the 21st cen­tu­ry.

And busi­ness agrees that air mat­ters. A 2013 study found that half of For­tune 500 com­pa­nies were head­quar­tered with­in ten miles of a hub air­port. That com­pares with just 29 per cent for all busi­ness­es in the Unit­ed States. Clos­er to home, Dutch banks ABN Amro and ING have put them­selves close to Amsterdam’s Schiphol Air­port, just six min­utes away in fact. And in Heathrow, which is see­ing ris­ing com­pe­ti­tion from Ams­ter­dam (Heathrow’s unof­fi­cial third run­way, appar­ent­ly) and Paris Charles de Gaulle, Pro­fes­sor Kasar­da says that the Sof­i­tel Hotel, direct­ly acces­si­ble to Ter­mi­nal 5, has become a busi­ness hub in its own right.

Else­where, there’s the exam­ple of Zhengzhou Inter­na­tion­al Air­port in Chi­na, where Tai­wanese tech­nol­o­gy giant Fox­conn has built a man­u­fac­tur­ing base with­in a bond­ed zone at the air­port, employ­ing 240,000 peo­ple assem­bling Apple prod­ucts. Raw mate­ri­als fly in, prod­ucts fly out.

Instead of hav­ing air­ports at the mar­gins of our liv­ing space, cities of tomor­row will have air­ports at their heart

“What they’re doing in Chi­na is very big,” says Pro­fes­sor Kasar­da, co-author of Aero­trop­o­lis: The Way We’ll Live Next. “It’s tar­get­ed on high-val­ue man­u­fac­tur­ing and advanced busi­ness ser­vices. They’re going about it very sys­tem­at­i­cal­ly and they’re doing it so well.”

He pre­dicts Zhengzhou will become a full-blown “aero­trop­o­lis”, built over the 160-square-mile Zhengzhou Air­port Eco­nom­ic Zone, with the air­port at its cen­tre. Pro­fes­sor Kasar­da fore­sees the rise of the aero­trop­o­lis as the fifth wave of trans­port-based human eco­nom­ic expan­sion, fol­low­ing the devel­op­ment of port, rail and car-based economies. Cru­cial­ly, it means that instead of hav­ing air­ports at the mar­gins of our liv­ing space, cities of tomor­row will have air­ports at their heart.

Wher­ev­er the air­ports are they’ll need air­craft. Air­bus pre­dicts that the world will want 31,258 new pas­sen­ger and freighter planes worth near­ly $4.6 tril­lion by 2033, which is about 1,700 air­craft a year. That’s a lot of alu­mini­um and car­bon fibre, not to men­tion, engines, avion­ics, seats, life-vests – you name it.

For David Bent­ley, a UK-based ana­lyst from the Cen­tre for Avi­a­tion, while the Air­bus fig­ures speak for them­selves, hubs will be in the dri­ving seat for the next five years.

“The growth in the mar­ket is com­ing prin­ci­pal­ly out of the major hubs,” he says. “They’re see­ing spec­tac­u­lar lev­els of growth, in some places well into dou­ble fig­ures in both pas­sen­ger num­bers and freight. Hubs pro­vide a huge oppor­tu­ni­ty for com­pa­nies involved in air­craft man­u­fac­ture, hotels and retail. The amount of work that’s going into the retail at some air­ports, such as the new Istan­bul air­port, is phe­nom­e­nal. They’re re-eval­u­at­ing the way peo­ple buy things. I can imag­ine sup­ply indus­tries grow­ing up around hub air­ports, per­haps in a way we haven’t seen before.”

And there­in lies the broad­er busi­ness ben­e­fits of hubs. “Hub air­ports are crit­i­cal for com­pet­i­tive strat­e­gy,” says Pro­fes­sor Kasar­da. “They’re not just city or region­al assets, they’re nation­al assets.” Cit­ing the exam­ples of Sin­ga­pore or Hong Kong, he cau­tions that busi­ness is now the sur­vival of the fastest. “It is no longer the big eat­ing the small, but the fast eat­ing the slow,” he says.

That’s why busi­ness needs to speak up, to ensure that hubs such as Heathrow are allowed to grow. “Busi­ness has an oblig­a­tion to empha­sise to gov­ern­ment lead­er­ship how absolute­ly crit­i­cal hub air­ports are to their com­pet­i­tive­ness and pros­per­i­ty,” Pro­fes­sor Kasar­da con­cludes. “Time is not only mon­ey, time is cur­ren­cy. Busi­ness­es need to be con­nect­ed. Hubs pro­vide that con­nec­tiv­i­ty to max­imise that cur­ren­cy.”

CASE STUDIES

Hamad International — Doha, Qatar

Boast­ing two run­ways longer than Heathrow’s – one of them 900 metres longer – and with capac­i­ty planned for 50 mil­lion pas­sen­gers a year, Doha’s new Hamad Inter­na­tion­al Air­port (HIA) is not about to run out of space.

After all the Qatari capital’s pop­u­la­tion is just 800,000, so even if they all decid­ed to jet off at once, the queues at HIA’s 137 extra-wide check-in desks would almost be man­age­able. Don’t for­get also that the new 600,000-square-metre ter­mi­nal, with its Ara­bi­an Sea wave-inspired design, is Doha’s largest build­ing.

Pret­ty obvi­ous­ly, ambi­tious Qatar, already known for its Al Jazeera media net­work and its win­ning bid to host the Fifa foot­ball World Cup in 2022, has oth­er things in mind. Name­ly, the gas-rich state wants to ape the suc­cess of near­by Dubai to become a major world­wide hub for air trans­port.

And HIA, which opened in May, is their board­ing pass. Aligned with Qatar’s nation­al flag car­ri­er now based there, it bills itself as the “five-star gate­way to Qatar and on to the rest of the world”, and boasts being eight hours’ flight from two thirds of the world’s pop­u­la­tion.

Des­ti­na­tion archi­tec­ture includes a 90-metre-high cres­cent-shaped air traf­fic con­trol tow­er, plus there’s a 200-room lux­u­ry air­side hotel and 25,000 square metres of shop­ping. While the seafront HIA com­plex as a whole spans 11 square miles – about one third the size of the city of Doha – it’s only get­ting big­ger, with plans to sur­round it with an air­port city free trade zone cov­er­ing a fur­ther four square miles.

Kuala Lumpur International —  Malaysia

With a vaunt­ing vision to rede­fine what we under­stand by the word “air­port”, the own­er of the Malaysian capital’s prin­ci­pal hub Kuala Lumpur Inter­na­tion­al Air­port (KLIA) and its recent­ly opened sis­ter low-cost hub KLIA2, is work­ing on a plan that reads like an improb­a­ble 1970s sci-fi nov­el.

Dur­ing the next decade, it is build­ing a full-blown air­port city called KLIA Aeropo­lis over ten square miles of land, which it has already ear­marked around the exist­ing air­ports.

When it’s com­plet­ed, KLIA Aeropo­lis will offer sev­en zones opti­mised for activ­i­ties you would expect, such as logis­tics and car­go, as well as busi­ness, but also ser­vices such as med­ical tourism, agro-tourism and theme parks – yes, plur­al. There will also be a uni­ver­si­ty, a golf resort and a free zone for shop­ping. In addi­tion, it will encom­pass the Sep­a­ng F1 cir­cuit, host of the Malaysian Grand Prix. “Move your busi­ness to KLIA Aeropo­lis for suc­cess, pros­per­i­ty and progress,” entreats its own­er.

And work has begun: in the com­ing months the first mas­sive 25,000-square-metre phase of an out­let retail park, the biggest in South-East Asia, will open just four miles from the air­port, with a shut­tle bus oper­at­ing between the two, all part of the mas­ter plan.

In the developer’s own words, KLIA Aeropo­lis aims to become “a tru­ly remark­able new air­port city devel­op­ment with top-class tourism attrac­tions – to become a des­ti­na­tion in its own right”. Already the world’s 20th busiest air­port in terms of pas­sen­ger num­bers, with 47 mil­lion pass­ing through its scan­ners in 2013, for KLIA and KLIA2 the sky, it seems, is the lim­it.