Regional Airports face unique challenges

Developing and implementing a strategic direction for regional airports often poses major challenges for local government operators. We had the chance to speak with Ben Hargreaves* about key aspects that need to be considered when it comes to regional airport development and how playing at the strength of regional communities can help formulating a vision for the future.

 Question: Regional airports are of vital social and economic importance for the nation’s regional, rural and remote communities. Yet, running a regional airport that is commercially successful poses major challenges to local government operators. In your experience, what factors most commonly determine and/or hinder regional airport development?

Ben Hargreaves: The Aerodrome Local Ownership Plan precipitated the transfer of these vital assets to local governments, and I believe that’s generally the right level at which to balance the financial costs against the social and economic benefits airports bring at a regional level. The difficulty has been that local government authorities, if they’re honest, probably didn’t really know how to manage these facilities in an effective way. Some have learnt faster than others obviously, and, really, operators haven’t had to face up to the challenge until recently. It’s only now, twenty or so years on from taking ownership, that the realities of the maintenance burden they have inherited are beginning to crystallize. The financial imperative of this is driving them to focus increasingly closely on the commercial side of operations.

From what I’ve seen, the most successful operators are those that understand the need for a bit of ‘joined-up’ thinking about how the airport fits socio-economically into the region. It’s essential to have a strategy – a clear, defined goal for what you want the airport to deliver and then a plan for achieving that goal. This holds true whether we are talking about Brisbane or Birdsville. Obviously, the scale and complexity will change, but without that strategy any success is going to be more by luck than good management.

Also, it’s important to be realistic and cautious about the likelihood of realizing certain opportunities. Don’t invest without first weighing up the risks as well as the potential benefits.  ‘Build it and they will come’ does not always apply to regional, rural or remote aerodromes. The most commercially successful airports invariably invest a lot of hard work into promotion and securing opportunities before they make significant investments.

Question: Local governments have limited funds to support the development of their airports. What questions need to be answered in order to make an informed and transparent investment decision?

Ben Hargreaves: Assuming the obvious question – how much will it cost? – has been determined then firstly I would ask: is this an operationally critical investment? That is, if I don’t invest in this, will the airport cease to offer the community the essential level of operational capability that it needs? This will vary between airports: in the most remote places, even a few days without use of the airport causes major logistical, social and economic detriment; at other places, the socio-economic impact might be less.

If the investment isn’t essential operationally, then what will the increase in revenue be as a result of its implementation? This is a much tougher one to answer as there are so many unknowns. And raising user charges to cover the cost is often prohibitive, so you have to be realistic about the increase in usage that can be achieved. Ultimately, though, it boils down to weighing up the financial gap that ratepayers need to fund against the social and economic benefits the enhanced airport capability will provide.

Question: Australia’s airlines have recently announced more flights to remote towns to accommodate demands deriving from the resources boom. What are the changes and challenges for affected regional airports? Do you see a general growth in regional air travel?

 Ben Hargreaves: To answer the second question first, I think there are two categories of remote towns – those that serve resources operations, and those that don’t.  There’s a lot of activity in the first group and, to be honest, from an investment perspective it’s probably a no-brainer. The nature of fly-in fly out economics though means that the level of airport infrastructure required at these places is pretty substantial, and that comes with a similarly hefty cost. So there’s still a need to ensure these costs are allocated fairly between all the beneficiaries, to deal with the inevitable growth going forward.

For those regional areas that are not directly affected by the resources activity, then there is much more of a differential, and I’d say growth is not so certain. A lot of places have lost regional air services over the last decade and this is likely to continue as the 19-seat and smaller aircraft fleet diminishes.  Where there’s enough demand to support a reasonable frequency of larger turboprop or jet aircraft, the route economics can start to allow airlines to stimulate the market and there’s a snowball effect. Below that threshold though the danger is that service frequency, and the corresponding social benefit, is going to reduce. The challenge is to work with all your stakeholders to try and match services to demand at an appropriate frequency. Competition is good, but below a certain level of demand it can be counterproductive and developing a close relationship with one particular airline might actually deliver better results from a social perspective.

So to generalize about regional air travel growth prospects is dangerous. Each airport has its own unique set of contextual factors that will affect the potential for air travel demand. And of course, there’s a whole range of non-airline related opportunities to consider as well. Whilst the drivers for non-airline activity overlap quite a lot with those for passenger traffic, there are some fundamental differences which mean you can certainly achieve one without necessarily having the other.

 Question: Dealing and engaging with stakeholders is crucial for airports, especially when it comes to furthering growth and development. What mistakes are most commonly made when airports communicate their growth plans? How can they be avoided?

Ben Hargreaves: Probably, the most important thing to do is engage with all stakeholders as early as possible in the process. Stakeholders can be surprisingly wide-ranging in nature and often include groups that might not be obvious at first sight. But all of these stakeholders can contribute to and stimulate the formulation of a comprehensive strategy – a goal – in terms of what the airport should represent within the socio-economic context. In terms of techniques, there isn’t necessarily any right or wrong way of going about this. It really depends on knowing who your stakeholders are and the message you want to communicated (and always remember communication goes in both directions) as to how best to achieve it. I’ve seen several very good examples, and at least as many inappropriate ones. It does take a bit of effort to get it right, but I’d say that in all cases I’ve seen that investment has been repaid several-fold in terms of allowing the full potential of regional airports to be realised.

Question: You are facilitating Regional Airport Asset Management and Development Workshop in September. What can participants expect to gain from their involvement?

Ben Hargreaves: The workshop really aims to give attendees a thorough understanding of the diverse range of considerations necessary to effectively run a regional airport facility. So at the first level it’s an opportunity to gain an overview of some of that ‘joined up thinking’ I was referring to earlier. The workshop format will offer a much greater level of individual interaction than a more formal conference forum, so the speakers can present the issues generally and then really tailor the discussion sessions around an application of those principles personalised to the actual airport representatives in the room.  So there’s a real opportunity to get some ‘free advice’ from the speakers, and to gain different perspective from open discussion with the other attendees.  I think it can be challenging for local government airport operators to find effective ways to benefit from sharing experiences and knowledge at the level of smaller airports, so this also represents a good opportunity to establish or strengthen some networks with industry colleagues, which can be a really valuable source of ongoing support.

* Ben Hargreaves is the National Manager – Aviation at REHBEIN Airport Consulting. Ben is a professionally qualified civil engineer and airport planner with over 13 years experience. He has considerable experience in the planning, design and management of regional airports. Ben has been involved in numerous airport planning and development studies, in Europe, the Middle East and especially Australasia. Since joining REHBEIN Airport Consulting in September 2005, Ben has played a lead role in the development of comprehensive strategic airport master plans for Wagga Wagga and Narrabri airports, a feasibility study into preferred ownership and management structures for Mildura Airport and a National Airports Strategic Management Plan for 21 regional airports in Papua New Guinea, amongst many other similar projects. He has previously presented on strategic issues facing regional airports at the Aviation Business Asia Pacific Airport Development summits in 2008, 2009 and 2010.