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Carving a niche in the Levant

Posted: 7 December 2012 | Kjeld Binger, Chief Executive Officer, Airport International Group, Queen Alia International Airport | No comments yet

Jordan’s Queen Alia International Airport (QAIA) is preparing to launch its landmark new terminal in early 2013, with hopes that this contemporary re-imagining of the country’s primary portal will bring new prosperity, transforming the airport into a regional niche hub.

With its strategic geographical location, Jordan’s QAIA is well positioned to become an important passenger, cargo and transit hub in the Middle East, connecting East and West via a country with political stability in spite of regional turmoil. Indeed, QAIA has experienced rapid increases in passenger traffic, aircraft movement and cargo traffic over the past several years. From 2007 to 2008, passenger volume rose a remarkable 16 per cent. Since that time, annual passenger volume has risen from 4.5 million in 2008 to 5.5 million in 2011, an increase of 22 per cent in three years. With its current infra – structure only able to handle a maximum capacity of 3.5 million annual passengers, QAIA has been undergoing the construction of a landmark new terminal – a re-invented and fully functional airport in and of itself – that is nearing completion of its first and most important phase.

The airport renovation and expansion project at QAIA was awarded to Airport International Group (AIG), a Jordanian consortium of regional and international investors and experts in infrastructure development, construction and airport management. The project began in 2007 with the concurrent construction of the new terminal and renovations of the existing terminals.

Jordan’s Queen Alia International Airport (QAIA) is preparing to launch its landmark new terminal in early 2013, with hopes that this contemporary re-imagining of the country’s primary portal will bring new prosperity, transforming the airport into a regional niche hub.

With its strategic geographical location, Jordan’s QAIA is well positioned to become an important passenger, cargo and transit hub in the Middle East, connecting East and West via a country with political stability in spite of regional turmoil. Indeed, QAIA has experienced rapid increases in passenger traffic, aircraft movement and cargo traffic over the past several years. From 2007 to 2008, passenger volume rose a remarkable 16 per cent. Since that time, annual passenger volume has risen from 4.5 million in 2008 to 5.5 million in 2011, an increase of 22 per cent in three years. With its current infra – structure only able to handle a maximum capacity of 3.5 million annual passengers, QAIA has been undergoing the construction of a landmark new terminal – a re-invented and fully functional airport in and of itself – that is nearing completion of its first and most important phase.

The airport renovation and expansion project at QAIA was awarded to Airport International Group (AIG), a Jordanian consortium of regional and international investors and experts in infrastructure development, construction and airport management. The project began in 2007 with the concurrent construction of the new terminal and renovations of the existing terminals. These upgrades to the old facilities included numerous improvements, from resurfacing of aircraft taxiways and aircraft parking areas to a wider range of retail outlets, to upgrades to cooling and heating systems, bathroom facilities and lighting. While these renovations have made significant improvements to the airport’s facilities, the infrastructure of the terminal is still outdated and pushed well beyond its capacity. Fortunately, with the new terminal approaching its highly anticipated opening, QAIA will be converted into a modern, state-of-the-art gateway capable of accommodating, and encouraging, growth in airport traffic and local tourism for years to come.

Public-private collaboration

AIG manages the QAIA development project through a Public-Private Partnership (PPP) with the Jordanian government, laid out in a 25-year Build-Operate-Transfer (BOT) concession. Through this agreement, the Government retains ownership of the project while collecting 54.64 per cent of gross revenue through the end of the concession, after which it takes over responsibility for the airport’s operations. This arrangement allows the Jordanian Government to make a massive infrastructure improvement without investing a large sum of the Kingdom’s financial resources, and concurrently benefit from the profits, which can then be re-invested in other economic and social projects, serving as an economy catalyst and an investment multiplier.

The consortium of investors that forms AIG includes Invest AD, Abu Dhabi (38 per cent), Noor Financial Investment, Kuwait (24 per cent), Edgo Group, Jordan (9.5 per cent), J&P Avax, Greece (9.5 per cent), J&P (Overseas) Ltd. (9.5 per cent) and Aeroports de Paris Management, France (9.5 per cent).

While major infrastructure and construction endeavours in the Middle East and throughout the world are routinely being stalled as a result of the current economic climate, funding for the QAIA project was secured in advance by the International Finance Corporation (IFC) – the commercial extension of the World Bank – and several other commercial financiers, including the Islamic Development Bank. As a result, the airport renovation is the only major development project in the Kingdom’s recent history where construction has not been stopped since ground was broken. AIG secured an estimated U.S. $750 million to fund the new terminal, as well as an additional U.S. $100 million for improvements to the existing facilities while the new facilities were under development. As such, even with minor challenges faced along the way as a result of the scale of the project and the airport’s unexpectedly strong growth, the QAIA development project is already being hailed as one of Jordan’s most successful publicprivate collaborations.

Positioning for take-off

While QAIA does not compete with mega hubs in the Middle East like the Dubai International Airport – which handles approximately 50 million passengers annually – the Amman airport aims to position itself as a regional niche hub, capitalising on its strategic geopolitical location and the country’s attractiveness as a tourism destination. With iconic archeological and natural wonders like Petra, Wadi Rum and the Dead Sea drawing travellers from around the globe, the Kingdom aims to increase its tourism revenue to JD 4.2 billion annually by 2015. AIG has partnered the Jordan Tourism Board to develop a holistic strategy for driving revenue to both QAIA and, subsequently, the country’s tourism industry, whose revenues account for approximately 13 per cent of GDP. Likewise, a significant portion – approximately nine per cent – of Jordan’s GDP comes from Foreign Direct Investments (FDIs), which the QAIA project has had noteworthy success in helping to attract. With the airport serving as visitors’ first and last impression of the Kingdom, its role in facilitating growth in these sectors is crucial.

Since assuming the responsibility of the development of QAIA, AIG has worked to expand the airport’s portfolio of airlines and routes; the number of airlines using QAIA has increased over this period from 28 to approximately 44, while the volume of flights has risen more than 40 per cent. AIG also works hand-in-hand with Jordan’s national carrier, Royal Jordanian – which is based out of the airport – to achieve mutual, long-term goals, which include the positioning of QAIA as a niche hub. The airport consortium is encouraging increases in travel to the Kingdom by helping facilitate Open Skies agreements; to date; Jordan has signed 31 bi-lateral Open Skies agreements with 31 countries.

Beyond its successful measures designed to increase passenger volume and aircraft movements, QAIA’s ‘niche’ positioning strategy includes increasing the airport’s cargo processing. Following a thorough cargo strategy study, AIG implemented an advanced cargo-handling mechanism designed to increase the airport’s cargo capacity with significant success. In the first half of 2012, cargo processing surpassed the same period of the previous year with an increase of 8.5 per cent.

While AIG’s involvement at QAIA and with the Jordanian government has helped facilitate many of these milestones, the opening of the airport’s state-of-the-art new terminal will likely drive these efforts further with greater force and efficiency.

A modern marvel

Designed by renowned architect Sir Norman Foster, the new terminal at QAIA is an iconic fusion of modern architecture and cultural homage. This final design was personally selected by Jordan’s King Abdullah II and reflects a contemporary reinvention of the Kingdom’s primary portal. Undeniably the most standout feature of the terminal is its roof, which comprises 127 concrete domes inspired by Bedouin tents; the concrete used for the entire roof weighs in at more than 55,000 tons. Inside, travellers and visitors will encounter a large, spellbinding skylight and an acoustic ceiling, as well as elevated walking bridges framed by glass balustrades. The aesthetics of the terminal alone epitomise an entirely new image of the country for visitors and passengers in transit.

The 103,000m2 – which will open following a one-time, overnight transfer of operations from the old facilities – will usher in seven new contact stands and a remote boarding lounge with six additional gates in its first phase. Duty-free retail space will see an increase of 25 per cent to more than 6,000m2; AIG is working to provide a wider variety of retail outlets for passengers, with the number of outlets increasing from 29 to 39. To ensure quality at these new retail outlets, all vendors for the new terminal were required to undergo a competitive, transparent international bidding process. With the improved circulation of the new terminal, these retail spaces will be accessible to passengers directly after crossing the security checkpoint.

Perhaps most importantly, the modern, updated infrastructure of the terminal will immediately catapult the capacity of the airport from 3.5 million to seven million. Considering that projections for the new terminal estimate that it will welcome 6.2 million passengers in its first year of operation, this increase in capacity at QAIA will put AIG on track to continue the next phases of development in anticipation of traffic increases, rather than to catch up with them. While QAIA has experienced phenomenal growth over the last five years, these rates are expected to begin leveling off to a more sustainable pace, giving AIG plenty of time to develop the next phase of the airport.

This next phase involves the demolition of the existing terminals – which will end operations once those at the new facilities begin – to make way for further expansion. This phase will increase the airport’s total capacity to nine million annual passengers, while additional develop – ments will allow the airport to reach a capacity of 12 million, when needed.

The infrastructural developments at the new terminal driving this increase in capacity include larger and more numerous check-in areas, more efficient security checkpoints and an improved layout. These upgrades will allow passengers to travel from check-in to their departure lounges in a much quicker and more efficient manner. Meanwhile, upgrades of seating in waiting areas, children’s play areas, hotel facilities and the increased variety of retail outlets – particularly in food and beverage options – will make this transit process more comfortable and enjoyable for passengers. As well, AIG has installed a more modern baggage handling system to reduce transport times for luggage, cutting back on wait times in the baggage claim area. At the new terminal, cargo-handling will get another significant boost, with the assistance of improved ramp services, design features that will allow for efficient tail-to-tail cargo transfers and new support infrastructure, such as freight forwarders, established trucking and logistics companies, and warehouses.

Operational readiness

With the new QAIA airport terminal already at 91 per cent completion, AIG will presently be embarking on the process of testing operational readiness to ensure that the airport is fully functional on the day of its launch. One of the key factors that will determine this readiness lies in the fluid execution of the operational transfer. This overnight process will involve the precise co-ordination of approximately 4,000 airport employees, and thus requires extensive preparation, training, and planning.

Beyond the obvious improvements that the new terminal will have on QAIA and its aesthetics, capacity and functionality – and beyond the direct and indirect benefits it will have on the country’s economy – transforming the Kingdom’s primary portal will serve to position Jordan apart from its neighbours as a successful image of progress and development in the region. This re-imaging that the new airport terminal will instill on the country is perhaps what will ultimately be its greatest impact; if QAIA can succeed in establishing itself as a regional niche hub, the rest of Jordan will likely see similar successes.

 

About the author

Since November 2011, Kjeld Binger has been responsible for the opera – tional management and delivery of the new terminal of the Queen Alia International Airport in Jordan’s capital city, Amman.

Mr. Binger has 18 years of experience in the airport sector. In his capacity as Executive Vice President of Copenhagen Airport (CPH) he oversaw the trans – formation of CPH to a major regional hub, and as CEO of Copenhagen Airports International, he acquired and operated a successful portfolio of 11 airports globally. Other positions include Chairman and CEO of ASUR Mexico, and CEO of DAE Airports as well as board member of various airport companies.

Mr. Binger’s areas of expertise include business planning, acquisition and operational management of existing airports as well as development of Green and Brown Field Airports. Mr. Binger’s main focus has been on the development of necessary infrastructure and commercial facilities to supply capacity in due time, constantly taking into account the strong correlation between market development and the necessary supply of quality capacity at competitive rates.

Mr. Binger is strongly focused on the fact that high quality in all respects of airport operations is the major driver of best-in-class profits and long-term development. Quality operation is a key element in positioning the airport relative to market development and price competitiveness among customers.

Mr. Binger graduated in 1980 from the Technical University in Odense, Denmark with a Bachelor of Science degree in Civil Engineering and Structural Engineering.

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