Airport Infrastructure Keeping Up With Demand In Asia Pacific

Airport Infrastructure:
Keeping Up With Demand
In Asia Pacific
Schedules Flight Status Analytics Cargo Traveller

© 2015 OAG Aviation Worldwide Limited. All rights reserved
Airport Infrastructure: Keeping Up With Demand In Asia Pacific
2
Contents
1 Foreword 3
2 Grappling with Growth 4
3 Conurbations & Crossroads 6
4 Chinese Airport Development 7
5 Capacity Hotspots 10
6 The Scale of the Task 14

3
1 Foreword
An average of almost 300,000 seats every day. That’s how much additional capacity carriers added
in the Asia Pacific region last year – a staggering amount. This is not a new phenomenon. The Asia
Pacific market has been growing by an average of 8% over the last 10 years; but what of the airport
infrastructure and the capability to keep pace with the demand? Aircraft are mobile assets, able to be
redeployed on different routes or emerging markets at very short notice, and clearly airports have a
different challenge.
There is an abundance of airport projects either planned or already commenced however there has
often been a gap between intention and infrastructure delivery. Economic growth, population growth
and the further emergence of new low cost carriers continues to fuel the airline capacity in the
region. And speaking of fuel, we are now entering a period of very low prices, certainly in comparison
to recent years, and that is creating uncertainty – will this further delay some of the intentions to
expand? Having the right capacity at the right time is undoubtedly a challenge. Not having the
available capacity to handle the demand puts a dent in any economic development plan.
In this report we utilise our extensive analytics tools to assess the capacity growth in Asia Pacific and
highlight some of the upcoming challenges for airport operators in the region to satisfy the demand.
Not all markets are equal and we offer insight into where and when some of these ‘crossroads’ have
to be tackled.
Mark Clarkson
Business Development Director – OAG
Mark Clarkson is Business Development Director ASPAC, OAG. Mark has responsibility for the
combined JAPAC and China Sales operations, with the core focus to lead, develop and implement
the appropriate activities to deliver revenue growth and the expansion of the business in the ASPAC
region.
Mark was previously Commercial Director at OAG and responsible for all commercial activities
including customer relationship management, new product development and strategic partnerships.
Prior to joining OAG in 2012, Mark spent six years with consultancy firm Airport Strategy and
Marketing (ASM) as Vice President, where he was responsible for delivering client projects including
new route development and network strategies. Mark worked with airports and tourism authorities
in the Caribbean, Europe, Middle East, Africa and Asia to implement successful strategies in building
sustainable air services. Notable highlights were delivering the first LCC airline JetBlue to St Lucia
and a new direct Asian service for London Gatwick Airport for Vietnam Airlines.
Before ASM, Mark worked at Peel Airports Group for six years, where he was responsible for
commercial and marketing functions including route development and airline relations.
www.linkedin.com/pub/mark-clarkson/b/27a/379/

4
2 Grappling with Growth
In 2014 scheduled airline seat capacity to, from and within the Asia Pacific region reached 1.6 billion
for the first time, continuing a trend of rapid growth which has seen capacity more than double in
the last 10 years. Annual growth has averaged 8% each year for the last 10 years, and in the last 12
months alone carriers have added, on average, nearly 300,000 seats every day.
Looking forward, there can be no doubt that the focus of growth in the aviation industry is shifting
east. The International Air Transport Association (IATA) confirmed this in October 2014 when they
published their first ever 20 year passenger forecast, putting China firmly at the forefront of future
demand for air connectivity1
. IATA expects that China will overtake the US as the world’s largest
passenger market by 2030, with passenger volumes expected to reach 1.3 billion.
Whilst propensity to fly (number of air trips per capita) is a standard measure of demand for air travel,
seat capacity per capita can also be used as a proxy measure. On average, there were just 326 airline
seats per 1,000 head of population available across Asia in 2014. Compare this to Europe where the
equivalent figure was 1,482 seats and the US where it was 2,938 and it is clear that airline capacity in
Asia could triple or quadruple and individuals would still not be flying at the same rate as in Europe or
the US.
OAG has generated three scenarios based on changes in Asian airline capacity per capita. The chart
below shows what might happen in these scenarios compared to the growth rates recently projected
by IATA.
Firstly we consider what happens if Asian capacity growth continues at the rate projected by IATA in
their latest passenger forecast, which is 4.9% per annum. This leads to capacity reaching 2.3 billion
seats 10 years from now, and 3.7 billion in 20 years’ time, making Asian airline capacity more than
two and a half times bigger than today. The number of seats per 1,000 head of population increases
to 714 by 2034, from just 326 today.
What if capacity per capita were to double? The first scenario considers this and leads to projected
capacity of 7.4 billion seats by 2034, five times greater than today. The second and third scenarios
consider what Asian air transport capacity would be if Asian travellers were to fly at the same rate
as Europeans or Americans. These figures are quite staggering in terms of the potential capacity
generated, and well in excess of the levels of capacity which could be accommodated by airport
developments in the pipeline.
IATA’s forecast passenger growth rate for the region looks modest compared to the actual capacity
growth in China, India and Indonesia in 2014. International airline seats to and from China grew by
1
http://www.iata.org/pressroom/pr/Pages/2014-10-16-01.aspx
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
Seats(Millions)
2014 2019 2024 2029 2034
Asia: Capacity Projections
Source: OAG Schedules Analyser, UN, IATA

5
9% while domestic capacity grew by 12%. Indonesia and India experienced similar rates of capacity
growth. All three economies are growing and the rise in air travel is associated with the growing
numbers of middle class consumers in each country, as well as population growth.
However the capacity projections in our scenarios are purely speculative, and of more immediate
concern is the region’s ability to cope with current levels of demand and short- to medium-term
growth.
According to the Centre for Asia Pacific Aviation (CAPA), there are USD115 billion worth of projects
planned or in the pipeline and with a good chance of completion in Asia. In China, 10 new airports
opened in 2014 and a further 50 to 60 airports are expected to come on-stream in the short-term,
adding to the existing 200 airports. But can infrastructure growth keep up with demand across the
rest of the region?
Both India and Indonesia are lagging behind in infrastructure provision. India opened no new airports
in 2014 and there is little in the pipeline beyond capacity expansion at the country’s main airports.
Indonesia opened six new airports but is wrestling with the challenges it faces at Jakarta where the
airport is operating at more than twice the intended capacity.

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3 Conurbations & Crossroads
Building new airports is not enough to meet demand. Capacity needs to be in the right places and that
can mean concentrated capacity in a few large hubs. Large airports attract disproportionate volumes
of traffic as passengers, not just because of the cities they serve but because passengers can connect
between flights. The benefits to passengers also include having a greater range of flight options –
especially important if there are delays and cancellations – more and better airport facilities, and the
economies of scale mean that airlines may offer more competitive fares. Asian countries will need to
focus particularly on getting capacity right at their major conurbations and crossroads.
Across the globe seat capacity is concentrated at a limited number of large airports. In the mature US
market the Top 25 airports handle 66% of all scheduled airline seats. In Western Europe the same figure
is 54%, in Southeast Asia it is 77% and in China the figure is 76%.
Some of the biggest airports in the US handle more than three times the average hourly departures
than the Top 25 Asian airports do. Given that these Asian airports will need to handle much of the future
demand, it is inevitable that runway utilisation will need to increase.
All airports in the Asia Top 25 handled more than 10 million seats in 2014, and the 10 largest airports
had 30 million or more seats in 2014.
The importance of China as a market is demonstrated by the fact that twelve of Asia’s Top 25 airports
are located in China.

7
4 Chinese Airport Development
There were 200 airports in China with scheduled services in 2014. This was 10 more than in 2013 and
21 more than in 2012. China is the only country in the world adding airports at this kind of volume
and pace. Compared to mature markets, this is a huge amount of development but is it enough and
is it in the right places?
Most of China’s airport development in the pipeline is located in the far west and north of China in
provinces such as Xinjiang, Inner Mongolia, Tibet, Yunnan and Heilongjiang. This is in accordance
with Chinese government policy which aims to develop western regions economically as has
happened in the east of China. It is clear from the domestic Chinese route networks that capacity
has grown strongly in the east and along the coast and, understandably, the next wave of airport
development will aim to improve connections across the rest of the country.
Meanwhile, the route network expands. In 2014, carriers added 204 new domestic routes in China,
taking the total to 1,906. The pace of international route development was similar with 151 new
international routes taking the total to 944. This was an increase of 19% versus 2013. Whilst eight
out of ten seats are on domestic routes, international capacity is growing faster and is the driver of
growth in many other country markets.
Chinese airports handled 754 million passengers2 in 2013, up 11%. Aircraft manufacturers estimate
that it will take an average of one new plane taking to the skies in China every day for the next two
decades to meet the growth in demand. Already major airports are reaching capacity and there is a
shortage of slots at Beijing (PEK), Guangzhou (CAN) and Shanghai (PVG).
Beijing Capital International Airport (PEK) is currently the world’s second largest airport, in capacity
terms, after Atlanta and OAG expects that it will overtake Atlanta during 2015. The airport is currently
operating beyond its design capacity of 80 million passengers per annum (mppa) as it reached 83
million passengers in 2013 despite T3 being the second largest passenger terminal in world; only
Dubai’s (DXB) Terminal 3 is bigger, and T3 at PEK is 17% bigger than the combined size of all five
terminals at London Heathrow. The airport currently has three runways. Passenger volumes are
forecast to rise to 113 million in 2015 and 142 million in 2020.
There are plans for a second international Beijing airport at Daxing which will operate with eight
runways and open with capacity of 40mppa, rising to over 70mppa by 2015 and eventually to 200
million. The new airport is due to open in 2018 and the inclusion of a low cost terminal is being
considered.
Elsewhere in China, Chengdu – China’s seventh busiest airport in terms of airline seat capacity – is
also set to benefit from development. The new Chengdu Airport is due to open mid 2017 with five
runways and will have capacity for 80mppa.
Chinese Domestic Route Network – week commencing 24 November 2014
Source: OAG Schedules Analyser

8
Source: OAG Schedules Analyser, CAPA

9
Source: OAG Schedules Analyser, CAPA

10
5 Capacity Hotspots
While new infrastructure is needed at Beijing, the situation is not as dire as at some other Asia airport
hubs.
In this section we look at some of Asia’s other very busy airports. Specifically, Hong Kong, Singapore,
Jakarta, Incheon, Taipei, Manila, Kuala Lumpur, Bangkok and Tokyo Haneda. Like Beijing, Jakarta,
Bangkok and Manila are all operating beyond capacity and the issue is particularly acute at Jakarta
and Manila.
Hong Kong
According to Hong Kong International Airport (HKIA),
traffic volumes are running one to three years ahead of the
HKIA “Master Plan 2030” and the airport is pressing the
case for a third runway which has recently been granted
its environmental permit. The design capacity of 420,000
aircraft movements annually is now in sight as there were
370,000 movements in 2013. Even with a new runway
in place, the airport states that the planned capacity
increases at HKIA and the other four Greater Pearl River
Delta airports will leave a shortfall in capacity equivalent to
100 million passenger trips by 2030.
Terminal capacity is less constrained at the moment as there is capacity for 87mppa while 2013
passenger volumes were just under 60 million. However, given that any new terminal will need to be
built on reclaimed land, planning has already started but a new terminal would be unlikely to open
before 2023.
With this background of increasingly constrained operations, the incumbent carriers have resisted
moves by new entrants to gain a foothold. Hong Kong Express, which mainly serves the Chinese
mainland, has a cap on slots imposed by the Hong Kong regulators. Jetstar Hong Kong is yet to start
operations, and Qantas has lowered its equity stake from 33% to 25% in an attempt to mitigate the
financial impact of the delay.
Singapore
Like Hong Kong, Singapore Changi International Airport
operates with two runways. The airport handled 343,765
aircraft movements in 2013 and, although traffic growth
has been sluggish, there are also plans for a much needed
new runway, although it is not expected to open for
commercial use until 2020. However, the airport has plans
for a fourth terminal which is due to open in 2017. The
terminal will be built on the site of the old budget terminal
and will increase airport capacity by 16mppa to 82mppa,
serving both legacy and low cost carriers. A fifth terminal
(T5) is also planned to be ready in the mid-2020s. From its current capacity of 66mppa, the five-
terminal and three-runway system will take Changi’s capacity up to 135mppa. In 2013 passengers
through the airport numbered 54 million.

11
Jakarta
As the capital city for an archipelago of 17,000 islands
making up the fourth most populous country in the world,
no-one should be surprised that air travel is booming at
Jakarta. However, with more than 60 million passengers
passing through the Soekarno-Hatta International Airport
in 2013, an airport designed to handle just 22mppa, it is
also not surprising that the airport is stretched to its limits.
The airport operates with two runways but has one of
the highest runway utilisation rates. The pressure on
the airport is apparent in the average seats per aircraft
movement which might have been expected to be low, as 72% of all seats in December 2014 were
domestic but in fact, the average number of seats per movement was 156 for domestic routes and
208 for international.
Projects to address the capacity shortfall have been delayed or cancelled and the problems get
worse. The latest plans include a new runway at CGK, due to open in 2017, but no new terminals,
and for a second airport to be built 56km east of Jakarta in West Java with a capacity of 70mppa
(to be known as Karawang International Airport). However, that then creates wider issues in terms of
surface connectivity.
Meanwhile, Lion Air and Garuda have massive backlogs of aircraft orders. In 2013 OAG Traffic
Analyser data shows that domestic passenger numbers grew by 8.4% while international passengers
grew by 12.4%.
Airports are being built elsewhere in Indonesia and 10 new airports were constructed in 2013 and
another 15 were due to open in 2014. OAG shows that the total number of Indonesian airports with
scheduled domestic air services was 88 in December 2014, up from 81 in December 2013 and 76 in
December 2012. New airports are good news but failure to address the situation at Jakarta is not.
Incheon
Incheon International Airport opened in 2001 and even
then there was a four-stage construction plan. To date
phase 1 and 2 have been completed and the airport now
operates with 3 runways and a single airport terminal.
The Phase 3 construction of Incheon Airport began in
September 2013 with work on a new passenger terminal.
The terminal is expected to be completed by the end of
2016, in time for the 2018 Winter Olympic Games, taking
airport capacity to 62mppa, from 44mppa. A further stage
of expansion will be completed by 2020 and take airport
capacity to 100mppa. A fourth runway may also be added
after 2020.

12
Taipei
Taipei Airport handled 30.7 million passengers in 2013 with
two terminals and two runways. However current design
capacity is for 32mppa and so the airport is approaching
capacity. A third terminal is being planned which will take
capacity up to 43mppa and is scheduled for completion
by 2020. A third runway is also planned but is not likely to
be in place before 2030.
Manila
The airport at Manila is bursting at the seams. The airport
handled 32.9 million passengers in 2013 even though it
was designed for a fraction of that but there are no major
infrastructure projects underway. While the Philippines
government announced plans for a new airport, a major
conglomerate, San Miguel Corp, delivered an unsolicited
alternative build-transfer-operate proposal in mid-2014.
San Miguel Corp is the majority stakeholder in Philippine
Airlines and is keen to see action taken soon to address
the need for new airport infrastructure. The government
plan would re-develop a former US air force base to the
south of the city as a 66mppa airport by 2025 while the San Miguel Corp proposal is for an airport to
the west of the city. Both would require some land reclamation. A third alternative, at least providing
some short-term relief, would be to develop Clark International Airport, perhaps adding a budget
airline terminal.
As of the end of 2014 none of these proposals were more than just proposals, leaving the capacity
issues at Manila as a major problem to be solved in 2015 or beyond.
Kuala Lumpur
Kuala Lumpur International Airport saw 51.4 million
passengers through its doors in 2013, well beyond the
operating capacity it was designed for. But then in October
2013 the airport completed its third runway followed by
the opening of its new low cost terminal– KLIA2 – in May
2014. Adding capacity for 45mppa, KLIA2 enables the
airport to handle a total of 70mppa and ensures that the
airport is now ahead of most other hub airports in Asia in
terms of capacity.
The design of KLIA2 evolved through the project and the
result reflects the evolving mode of operations of low cost
carriers in that it facilitates connecting passenger journeys and is possibly a standard bearer for the
future of airport terminal development.

13
Bangkok
Bangkok’s Suvarnabhumi Airport opened in 2006 at full
capacity. The next phase of construction is on-going and
due to be completed in March 2016. This will increase
capacity to 65mppa. Further expansion is planned which
will add a second runway and new domestic terminal and
take capacity to 125mppa by 2024.
The old Bangkok International Airport, now known as
Don Mueang International Airport, handled 38mppa at
its peak but was closed when Suvarnabhumi opened
under a single-airport policy. Following calls for it to
be re-opened it has since been creeping back into favour, especially with low cost carriers, and
now the government of Thailand is encouraging low cost carriers to move there to relieve pressure
at Suvarnabhumi Airport. Terminal 1 can handle 18.5mppa and renovation of Terminal 2 will take
capacity at Don Mueang to 30mppa.
Tokyo Haneda
Tokyo’s Haneda Airport handled more than 68 million
passengers on its four runways in 2013, and has a
capacity of 90mppa. Extension of one of the runways and
expansion of the terminal building has increased slots
to 447,000 in March 2014 and further slot increases are
planned due to easing of regulations about flight paths
into and out of Tokyo. With both Haneda and Narita
Airports expected to reach capacity around 2022 or
shortly thereafter, and with a government strategy which
aims to triple the number of foreign visitors to 30 million by
2030, proposals are already being made for the post 2020
infrastructure needs which might include a fifth runway.

14
This article was written using data and reports from OAG’s Schedules Analyser and Traffic
Analyser products. OAG is the global leader in aviation information and analytical services.
Its flights status and airline schedules and capacity databases hold future and historical flight
details for over 900 airlines and more than 4,000 airports. OAG has been trusted and respected
within the aviation industry for over 80 years.
OAG’s team of expert aviation analysts can provide ad-hoc aviation analysis or bespoke reports
to exact specifications from one-off projects to regular reporting. For further information contact
OAGMarketIntel@oag.com
For media enquiries please contact Esther Molina
GHC Asia +86 215 213 3030 or email Esther.Molina@ghcasia.com
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This information can be reproduced either in whole or in part, online or in print, for non-
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6 The Scale of the Task
It is clear that the combination of economic growth, population growth and the emergence of a
number of robust low cost carriers (which are finding ways to work with and around the sometimes
restrictive regulatory requirements in parts of Asia) is generating massive demand for air travel. Until
now, airports have found a way to accommodate this traffic but for how much longer? Certainly
new airport capacity is coming on-stream in China and there are plenty of plans in the pipeline in
other Asian markets but there appears to be a sizeable gap between intention and infrastructure. Of
particular concern is the capacity shortfall at Manila and Jakarta. How long will it be before the lack
of airport provision in these countries starts to hold back economic growth as tourists stay away
and trade becomes harder? The economic cost of doing nothing will soon be higher than the cost of
taking action.

© 2015 OAG Aviation Worldwide Limited.
All rights reserved
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Mark Clarkson
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