INTEGRATED REPORT 2019

DEVELOP AIRPORTS

Airports Company South Africa develops its airports and service offerings with a view to maintaining and improving its quality of service to customers, accommodating growth in air travel and providing future platforms for further growth of our capacity and footprint.

Focus areas

  • Governance, approval and design of infrastructure upgrade projects
  • Growth in advisory services
  • Innovation in airport maintenance
  • Procurement and supply chain management
  • Ongoing maintenance

Topics raised by stakeholders

  • Delays in infrastructure upgrade delivery
  • Alignment of government mandates and social programmes
  • Environmental sustainability
  • Sound financial performance, strong governance and regulatory compliance

Overview

We improve and expand airport infrastructure to unlock our airports’ development potential from a spatial point of view, while minimising disruption to airport operations. We are committed to providing world-class airport infrastructure for our stakeholders and the country at large. Our infrastructure investments provide significant regional and national economic benefits and are developed in consultation with the airline industry, local communities, local municipalities, provincial authorities and suppliers in order to ensure that all airport master plans are fit for purpose and consistent with relevant policies.

Compared with other state-owned enterprises, our capital expenditure requirements are modest, with R30 billion committed to an infrastructure refurbishment and replacement programme over five years. Of this, R19 billion will be directed to sorely needed new capacity development with the remaining R11 billion allocated to commercial, efficiency, technology, refurbishment and replacement work. The airports benefiting most from these infrastructure upgrades will be Cape Town International Airport and O.R. Tambo International Airport.

Several cargo infrastructure initiatives have been undertaken at our airports during the year. At O.R. Tambo International Airport the conceptual design process for the new midfield Cargo Precinct has been initiated. 

This precinct will cater for the cargo facilities and support services to address Phase 1, which will enable the handling of 750 000 tonnes annually, and for a later proposed Phase 2 which will allow for growth and expansion of up to 2 million annual tonnes. The new facility will provide capacity for general cargo, specialised goods, as well as distribution and support services for the air cargo supply chain.

Cape Town International Airport

At Cape Town International Airport expansion will address severe capacity constraints within the terminals, aprons and the runway. The Terminal 2 project will add much-needed international arrivals and departure capacity while also improving our retail offering and increasing tenants’ storage facilities. Terminal 2’s capital expenditure was approved in June 2019 and is planned to be completed by September 2023.

The new domestic arrivals terminal project will add much-needed capacity and significantly improve passenger flows. A contractor should be appointed by January 2020 with an expected project completion date of November 2022.

Growth in international routes reaching Cape Town International Airport has meant increasing pressure on runway and aircraft parking capacity. Airports Company South Africa is therefore increasing runway capacity by 50% through realigning the primary runway and associated taxiways, allowing for an increase in hourly aircraft movements from 30 to 40, and providing new flight paths over recently acquired land at Swartklip. The concept design for the new realigned runway has been approved. The EIA is also approved, with a contractor to be appointed by February 2020. Construction is expected to be completed by August 2022.

O.R. Tambo International Airport

Upgrade and expansion projects will begin construction in 2020 and will be phased in over five to eight years. It will not only improve our service delivery to customers and stakeholders but also entrench O.R. Tambo International Airport’s position as South Africa’s largest airport, enabling it to compete with the most efficient airports globally.

In order to accommodate demand and optimise aviation capacity, we are embarking on a few key initiatives:

  • The construction of nine large remote apron stands to provide much-needed aircraft parking capacity for aircraft such as Airbus A380s, and seven medium remote apron stands for aircraft such as Boeing 737s. A contractor is due to be appointed by September 2019 with the stands being delivered in a phased approach until full completion in December 2022. The Delta apron 39-49 reconfiguration project to increase remote bays for large aircraft such as Airbus A380s, has also reached the stage where a contractor will be appointed by September 2019 and the project is planned to be completed in April 2021.
  • Two projects for additional international busing gates, are in design phase and planned for completion in 2022. These will improve capacity for remote boarding.
  • The Terminal A refurbishment project to upgrade and replace old equipment and improve the look and feel of the facility, is in detail design stage and is planned for completion in January 2022.
  • The domestic departures airside corridor retail and seating nodes project is aimed at providing much-needed capacity to improve the retail offering and seating areas for passengers. The project is in the initial concept design stage and is planned to be completed in a phased approach with final phase to be completed in 2022.
  • At the airport’s western precinct, on an 8.5ha site, 180 000m2 of real estate has been earmarked for a mixed-use development consisting of commercial and retail buildings and a hotel, which will be completed in phases. Construction has started on the new office block to accommodate the Airports Company South Africa corporate office and the South African Civil Aviation Authority at O.R. Tambo International Airport. This project is scheduled to be completed in December 2020.
  • To further strengthen the position of O.R Tambo International Airport, the passenger journey is being made to be seamless and more efficient through the automation of various processes: information gates, passenger self-bag drop, pre-security automated gates with smart lanes, automated border control, self-boarding and an upgrade of the common-use self-service platforms are all part of our digitisation journey.
  • An airport slots management system called Score was implemented for allocation of common-use airport resources. This system allows us to optimise our resource utilisation for a Level 3 coordinated airport. Aircraft parking is one of our subsystems that is constrained and accommodating aircraft that operate out of slot times or without a slot proves challenging. The Score tool was introduced to bring a higher level of efficiency to our operations and the airport’s on-time performance.

King Shaka International Airport

While the airport remains relatively new at just eight years old, we are busy constructing two large aircraft parking stands and extending the airport’s Bravo taxiway, which is due for completion in June 2020. These interventions will provide additional capacity and enhance safety on the airside.

Performance

Infrastructure and capacity upgrades
The year in review was spent making sure the governance components, approvals and design phases of infrastructure upgrade projects were completed. This means in FY2019/20 Airports Company South Africa will be ready to place tenders into the market to bring contractors on board and begin construction in FY2020/21.

In FY2018/19 capital expenditure was a modest R1.1 billion, but we will catch up on our spending programme when nine projects begin full construction phase in FY2020/21. All capital expenditure for upgrade projects, except for Terminal 2 at Cape Town International Airport, has now been approved.

Our new Enterprise Project Management Office (EPMO) is facilitating the development of project management policies, procedures and standards across the organisation’s multiple portfolio management offices (PMOs) to mitigate the risks that are typically present in large capital expenditure projects. During FY2019/20 to FY2021/22 we plan to migrate from a Project Management Maturity level 1 (where standardised project management methodology is used in some projects) to a level 3 maturity (where standardised project management methodology is applied in all projects). We have adopted a common project lifecycle that is assisting with the improvement of our pre-project planning and feasibility processes which will lead to improved projects briefs and definition.

To mitigate disruption during construction and maintenance projects, where possible, construction operations which disrupt airport operations will be scheduled for night-time completion, with every precaution taken to suppress dust and to minimise noise as per regulated guidelines. Erosion management will be applied, and any disturbed natural areas will be revegetated with indigenous grass species unpalatable to birds and mammals. Where possible, wetlands and water treatment facilities will be kept away from flight paths, to offset potential bird strike hazards.

During FY2018/19 we reduced asset downtime – unplanned stoppage and repair by 27% due mainly to intensified technical monitoring, maintenance programmes and a service management programme intended to forge deeper relationships with service providers. We have also synchronised services such as cleaning with peak airport traffic times in order to optimise our use of services, improve our ASQ score and reduce operating costs. We are due to appoint a new cleaning service provider at O.R. Tambo International Airport by the middle of the 2019 calendar year.

Ablution facilities and people movers – mainly at O.R. Tambo International Airport – have been identified for replacement, and firewater designs at some airports are also being upgraded to meet compliance standards. This work is due to be completed in the next financial year.

Importantly, we have completed a condition assessment of approximately 1 200 pieces of infrastructure in order to determine asset refurbishment priority. Most of the Group’s assets have passed the 70% mark in their life cycle and are classed as being in the “wear-out phase”. Commercial assets such as hangars, industrial property, office parks and airline offices currently generate R38 million per month in non-aeronautical revenue for the Group, and over the next five to seven years at a cost of approximately R3.8 billion these facilities and assets will be refurbished to extend their useful life. In FY2018/19 we achieved our 99.5% target for asset availability. The improvement in mean time between failure (MTTR) improved by 114%. The asset management actual spend to budget was +8% for the year.

The aerotropolis concept

Airports Company South Africa’s airport master development plans all follow the aerotropolis concept, which looks to stimulate regional growth and create job opportunities around our airports, in partnership with provincial and municipal authorities, as well as regional economic and tourism bodies. Moves towards integrated planning for the developments of aerotropolis concepts at our airports are gaining momentum, as our case study of Cape Town International Airport’s Master Plan demonstrates. More details

Since the approval of a 25-year Master Plan for the Gauteng aerotropolis surrounding O.R. Tambo International Airport, plans to develop the midfield cargo terminal have been completed pending construction, which will be followed by the implementation of catalytic projects selected for their job-creation properties and the conversion of the surrounding region into a business hub. We continue supporting our partners in the City of Ekurhuleni to forge ahead as we focus on the midfield developments projects and the optimisation of the western precinct. These projects are a catalyst for the aerotropolis supporting socio-economic opportunities, employment and the development of the Special Economic Zone (SEZ). We are currently reviewing design options and conceptual layouts of the new midfield cargo terminal and working with the City and the provincial spatial Development and Roads and Transport Agency to ensure that the new K90 and PWD 15 access roads that enables midfield cargo are planned in tandem with our development.

An environmental impact assessment is expected by July 2021. The airport is constantly positioning itself as a significant player in the enabling of the socio-economic development aspects of the country’s National Development Plan by facilitating trade and tourism.

In Durban, the King Shaka International Airport aerotropolis Master Plan was approved by the KwaZulu-Natal cabinet in calendar 2018, with Dube Trade Port as the implementing agent. An implementation framework is being developed. The eThekwini Municipality is also in the process of appointing a transaction advisor for the bulk waste water treatment plant which will service the city’s northern areas, including Dube Trade Port and King Shaka International Airport, which will ensure long-term sustainable development is feasible in this node.

Unlike in major cities, formal aerotropolis project structures have not yet been established in George, Port Elizabeth, East London, Bloemfontein, Kimberley and Upington. However, discussions around the aerotropolis concept are taking place on different platforms. Through the offices of regional airport managers, Airports Company South Africa is in the process of formalising engagements with city councils and business communities. Our relationships with city councils have improved tremendously.

We have embarked on the project of concluding Airport Master Plans for regional airports. These plans will be in place within the next 24 months. Among all other relevant participants, city councils are the key stakeholders to participate in the master planning process. To date we have formalised our relationships with city councils in the form of MOUs in Port Elizabeth, George and Upington. We will now focus on doing the same for Kimberley, Bloemfontein and East London.

Airport Activities in FY2018/19 Project focus MOU’s signed with
Port Elizabeth International Airport We have made significant progress in integrating our airport business with the region of Nelson Mandela Bay Metro Municipality. Our relationships with key stakeholders are solid and regular engagements are under way. The Port Elizabeth International Airport Airlift Project seeks to replicate the success of Cape Town’s Air Access scheme and Durban Direct through a concerted partnership of signatories to the MOU. Short-haul route development to link the city with Kruger National Park in Mpumalanga, Windhoek in Namibia, Kigali in Rwanda and Harare in Zimbabwe, as well as long-haul routes to London in the UK and Frankfurt in Germany are being planned. The Airport Airlift Project: Airports Company South Africa, Nelson Mandela Bay Metro Municipality (NMBMM), Nelson Mandela Bay Tourism and the Nelson Mandela Bay Business Chamber. We are in the final stage of signing a multi-stakeholder MOU in Nelson Mandela Bay, and are embarking on a review of the airport precinct plans.
King Shaka International Airport A process is under way to appoint a transaction advisor for the implementation of a public transport link to King Shaka International Airport, with the intention of creating public transport corridors connecting King Shaka International Airport and Dube Trade Port to the main centres of Durban, Umhlanga, Ballito and other nodes in a long-term solution. In the interim, a short-to medium-term solution as a public transport link to the airport is being developed. Durban Direct, the route development committee for King Shaka International Airport, has been very active in engaging with international airlines to encourage new routes. British Airways now flies a direct route between King Shaka International Airport and Heathrow three times a week, commencing in November 2018. Private sector interest in driving tourism in the region has increased. eThekwini Municipality, KwaZulu-Natal Department of Transport and other stakeholders.
George Airport Conversations around the airport city are still at an infancy stage, but the mayor’s office and other government organisations are participating in discussions and airport plans have been presented at a forum convened and chaired by the Department of Trade and Industry, with a view to sharing spatial development plans. Our airport master plan is being drafted and will be completed within 24 months. Garden Route Municipality and City of George.

Innovation

Airports Company South Africa is being innovative in its approach to maintenance, including the use of alternative energy and storage solutions. We are also looking into the use of drones to perform several operational activities such as runway inspection and perimeter security patrols. We are working with Air Traffic Navigation Services and the South African Civil Aviation Authority to develop guidelines for the use of drones on our aerodromes as it will substantially speed up runway inspections, enable more frequent inspections minimising disruption to runway movements and enable easy patrols of parts of our perimeter security borders which are currently inaccessible for land patrols.

Outlook

Airports Company South Africa seeks to augment its aeronautical revenue through exploring new opportunities to grow revenue in the property, retail, advertising, car rental and car parking spaces.

We aim to use our world-class reputation in developing airports to generate non-aeronautical revenue by providing facilities that are attractive commercial propositions to suppliers and other stakeholders. Improved and innovative long-term planning will allow us to become more creative in our business model.

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