Ready For Kick Off

23 August 2007 (Last Updated August 23rd, 2007 18:30)

When South Africa decided to increase its international passenger capacity, it wasn't expecting to host the World Cup. However, this hasn't fazed ACSA's John Neville, who tells Nigel Ash he is confident of meeting his targets.

South Africa was already committed to the multi-billion dollar expansion of its two international airports, and the creation of a new airport at KwaZulu Natal. But a fresh sense of urgency was added when the Rainbow Nation won the mandate to stage the 2010 Football World Cup

At the very least, says John Neville, acting director of the Airports Company South Africa (ACSA), all construction work will have to be completed or suspended in or around operational areas by June 2010, when international football teams and their fans come flooding in.

ACSA, which owns and operates nine South African airports and manages one other, is expanding OR Tambo International Airport Johannesburg (ORTIA) and Cape Town, as well as the ambitious development plans for KwaZulu-Natal. At the same time, most of South Africa's non-international airports are also undergoing some development.

MANAGING THE TRAFFIC

At the moment, international and regional traffic is growing at just over 5%. "To be perfectly frank, on the international side ORTIA does strain at peak hours, while the domestic side still has capacity," says Neville. Because Johannesburg is generally at the end of long hauls, he adds, "we have a lot of aircraft that arrive in the morning and then depart in the evening. We just physically cannot create enough space on contact stands, so we also use bussing gates.

"In real terms, the value that we are getting out of this investment is between $9bn and $10bn."

"In terms of traffic movements, we are quite constrained by aircraft mix at the moment – we have everything from 30-seater turbo props to 747s – you need longer spacing between those sizes of aircraft than if they were all wide-bodied aircraft.

"Now, obviously, on domestic routes there will be a propensity to increase to a certain extent the number of movements, but that, I think, will also be outpaced by the increasing size of aircraft used on the domestic routes. Instead of using the 747-300 or 400, they will start using the 800. That gives you a huge increase in the passenger numbers without increasing the ATMs."

At the moment, ORTIA is established as a regional hub and an end-of-leg destination. However, Neville sees scope for a modest role as an international hub. "To a certain extent, we are already there, because on the route from the Far East to South America we are used as a hub, so planes do not have to go up to the Middle East and then back down. Thus, the Malaysia-South America leg is starting to pick up."

MASSIVE EXPANSION PROJECT

ACSA's headline investment figure of R19bn ($3bn) over the next five years is much larger than it looks. "South African construction costs are 2.5 times lower than in the UK," says Neville, "so in real terms, the value that we are getting out of this investment is between $9bn and $10bn. That puts what we are doing into perspective." Neville adds that this will increase passenger capacity to the kinds of levels that London Heathrow is planning to accommodate over the same period of time.

The majority of the money is being spent on ORTIA. Before 2010, the field will have a new international pier (R450m), a new central terminal building to provide a seamless link between the current domestic and international terminals (R1bn) and a doubling of the multi-story car park to 10,000 bays (R450m). There will also be some runway improvements and addition apron spaces.

CAPACITY FOR THE FUTURE

The international pier has nine wide-bodied multiaircraft stands (MARS). Neville explains that this means: "You can park two Class C aircraft on the same stand as a wide-bodied Class E aircraft, such as the 747 or A380, would use. Since we frequently use 737s for regional or short-haul international flights to the Indian Ocean islands, we can put two of those on every single position that we have for a wide-bodied aircraft."

"The work that we have underway at the moment will take our capacity up to around 25 million passengers."

However, the big investment starting next year will be the first phase of the new midfield terminal costing some R8.5bn. This, says Neville, will be the only construction work that will not (hopefully) stop for the football because it is total isolated from operational areas. The midfield terminal, which is currently at the planning stage, is due to come on stream by late 2013, early 2014.

In the year to last March, ORTIA handled 17.7 million passengers. "The work that we have underway at the moment will take our capacity up to around 25 million passengers, which at our current rate of growth we will hit by 2014," he says. "The midfield terminal will take us up to 38 million, which will give us around another six years growth."

ACSA had originally anticipated passenger increases of below 8% per annum at ORTIA, which now serves 54 different operators. In fact, says Neville, in the year to this March it had been 11.3%, after two years at 11.8%. Domestic has been growing faster at 14%, partly as a result of the three low-cost carriers, Kulula, 1Time and now Mango, a wholly owned subsidiary of South African Airways. Neville is anticipating the start of low-cost regional hub routes to Botswana, Zimbabwe and the Indian Ocean islands.

KWAZULU-NATAL

The contract to construct the airport in KwaZulu-Natal is expected in June 2007. Earthworks for a single runway and terminals were done 30 years ago, shortly after ACSA acquired the site 40km north of Durban. With an initial design capacity of 7.7 million passengers, the new field will replace the existing Durban Airport, 20km south of the city, with a capacity of four million.

The proceeds will go towards the investment budget, which, says Neville, is being funded in part out of ACSA's own reserves. "However we have also just very successfully launched a R2bn first phase bond issue, without guarantee to which Fitch gave an unsecured rating of BB+."

The bond, which was three times oversubscribed was for domestic distribution. Neville explains that it is the first phase of a total R10bn bond issue over the next couple of years. The rest of the investment will come out of ACSA's own income.

"International and regional traffic is growing at just over 5%."

Most of South Africa's remaining, non-international airports are undergoing some development. Port Elizabeth is in line for a 600m runway extension and currently handles 1.3 million passengers with a two million capacity. George Airport in the Western Cape – a major golfing destination, has just undergone remodelling and upgrading to cope with 600,000 passengers annually. Similar programmes are happening at East London and Bloemfontein airports.

If all this development goes to plan, South Africa will have an international air-passenger capacity to be proud of. And it will hopefully find that it not only avoids disruption to its expansion plans during the World Cup, but also proves its ability to handle massive numbers of passengers entering its borders.