Fascinated by cities as a place of excitement and great opportunities, indeed it is a common journey to experience life to find imagination, creativity or ignorance. Considered as a remedy to life by Albert Camus, it is a sanctuary for people seeking knowledge, wealth and salvation.
Most cities are growing with people trying to realize their dreams or increase their standard of livings, but sometimes growth can be a catalyst for poverty and inequality that we can notice more easily in megacities such as Cairo or New Delhi.
At this moment, the state of housing market suffers from multiple issues: soaring privates rents, unaffordable house prices which makes it difficult to predict what could be the future of our cities. From a social perspective, we are overwhelmed by the complexity of human needs, social environment and ecological objectives tends to be more difficult to accomplish than expected.
Ancient city “Heliopolis”, one of the oldest cities of Ancient Egypt was founded to be the center of the cult of the sun god Atum which was an important deity at the time, every pursuit to shape cities in harmony with our culture, beliefs and economy was a profound step to develop a better environment.
Tales of great cities nourish our imagination, people are fascinated by sumptuous places where culture, literature and art are masterpieces to sustain growth or lure skilled individuals. Naturally, we are inclined to build a new city in order to combat climate change which remains a critical issue for our political leaders at this moment.
Posing risk to our natural environment in the long term, the main question is: Aerotropolis as a city centred on the airport, is it realistic for a major part of our population and political leaders?
Are we valuing more our economy and wealth than our natural beauty and environmental preservation?
The Triumph of capitalism is a reality for a large portion of our societies, so this new city called “Aerotropolis” could be seen as a cult of productivity and scale economy where human beings are only a piece of this giant mechanism dominated by earnings and profitability.
A myriad of questions could be treated or introduced to outline the complexity of such project, nevertheless political leaders are obsessed by economic growth and this new urban form sensitive to several actors of the economy could offer new perspective for airports.
First and foremost, it is useful to define an “aerotropolis” in order to inform investors about the concept: so, what is an “aerotropolis”?
Aerotropolis Guru, John D. Kazarda has published a lot of articles treating of this subject and his knowledge of the airport industry can be considered as a mine of information. Indeed, the “aerotropolis” is a new urban form that relies on an airport and its integrated surface transportation infrastructure to speedily connect high-value, time sensitive firms to their distant suppliers, customers and enterprise partners. This concept of “Aerotropolis” can be seen as a new urban form, but in reality, it’s a difficult assertion to justify, indeed urban has many interpretations and several criteria should be taken into consideration to affirm this definition such as: administrative functions, economic characteristics, functional nature, population size and density.
In order to facilitate our task, we will consider it as a new urban form to understand the inner workings of an “Aerotropolis” and isolate the competitive advantage of such city.
Inspired by its research and ideas, this urban form will ultimately be surrounded by multiple clusters which relies on the airport activity, Professor Kazarda underlines the fact that this form consists of multimodal airport-based commercial core composed of an Airport City and outlying corridors that feed the city with additional revenues and supplemental advantages.
This type of form can at the end increase competitiveness and accelerate industries that are highly dependent of time or requires proximity with their factors of production in order to process rapidly.
The primary objective is to provide a top notch infrastructure that offers businesses speedy connectivity, and this proximity with suppliers, customers and partners is supposed to create synergies that will foster global integration or economic transformation.
Persuaded that this urban form will participate to create value for each business, our main goal is to seek grand strategies to promote this concept in order to modify the vision of an airport and foster rivalry between businesses to reach innovation.
Why do we think that this concept is creating value? Because if we analyse the value chain defined by Michael Porter, it may come to our attention that this concept will improve primary activities especially inbound logistics which tends to form a competitive advantage and increase profit margin for small businesses.
With a low cost of production, companies are able to transform their raw materials at a lower cost and then propose a high quality product, there is a small difference that we won’t discuss here but we think that it’s better to underline the value chain to understand that the primary purpose of the aerotropolis is to provide high quality products.
Enhancing the supply chain value will allow to increase profit margin , however the aerotropolis will be only a platform for businesses or it’s far more complicated.
In most cases, businesses reduce their support activities by lowering their expenditures in human resources management, firm infrastructure or procurement to gain profitability.
With this concept of proximity with the airport, businesses improve their supply chain management without cutting jobs to satisfy their shareholders.
After defining the role of an “Aerotropolis”, it may be useful to confirm that this concept can be integrated in a process of urbanization, which is the transformation of rural lands into urban economic activities.
With the Aerotropolis, a new type of city is trying to emerge as a model for growth and productivity where everything will be centred around the airport.
As a cornerstone to implement this new urban form, the airport will be used as a powerful infrastructure to reduce cost and increase trade.
Our cities are changing with a large population and density, trade is critical to maintain growth and it appears that a radical transformation of our way of life is necessary to reduce our carbon footprint, poverty and inequality of wealth.
As a matter of fact, there are multiple shape for a city due to a subtle combination between their geographic, climate and economic factors that influence the physical form of the city.
Urban complexity is somehow difficult to explain, for instance the Radiocentric City was built with natural geographic features to protect cities from any enemy and this form was adopted by preindustrial people.
We notice that people were using their natural environment to shape their cities in the form of a great container, they also radiate outward from a common center which makes them particularly useful to shield the city against any intrusion.
After the industrial revolution, cities with large economy were forced to use gridiron cities composed of straight streets crossing at right angles to create regular city blocks.
Facilitating the movements of people and products, it was designed to provide performance and efficiency in order to boost economic activity.
Divided into small pieces of land, people were able to buy land to support their families and shops were easy to establish in order to sustain economic growth.
RADIOCENTRIC CITY : A CITY DESIGNED TO PREVENT ANY INTRUSION AND PROTECT THE POPULATION
As we were mentioning earlier, cities are perfect places to study urban or social life and Robert Park introduced its idea of natural areas which represents clusters of activity (business districts) where people compete for scarce resources.
Cities are evolving, from concentric zones to multiple nuclei theory every aspect of our urban life are being scrutinized to find a common denominator
To simplify our research, Robert Park considered that competition between people forced them to move in order to obtain scarce resources, they were trying to invade natural areas to survive in cities fuelled by fierce competition.
Shaped by scarcity, the emergence of concentric zones growing like a tree was a theory developed by Burgess to justify the economic competition in cities.
Then, Chauncy Harris and Ullman developed multiple nuclei theory explaining that several Central business districts grows around the center due to the fact that certain activities requires separate districts especially industrial or heavy manufacturing.
On a regular basis, researchers developed theories to explain the social behaviour, economic activity and its importance for cities.
From our point of view, it’s a complex subject that includes a social, historical and cultural analysis to understand the whole process so we won’t go further to concentrate our efforts on the economic aspect of the “Aerotropolis”.
Aerotropolis, a noble role to build the economy of speed supported by creativity and innovation
Despite their manifold approach, reconciling airports with economic opportunity will be fierce challenge and aeronautical fees remains a critical component to maintain their profitability.
Still there is an infinity of possibilities for airports to enhance their economic development and the ‘Aerotropolis’ could be seen as a realistic suggestion to revolutionize our vision of airports.
Engaging a profound transformation of our cities isn’t a mere task, it requires a meticulous strategy to support growth and mitigate risk in a context of uncertainties.
As a productive industry in terms of employment and growth, air transport contributes to the economic development of several countries and remains a critical engine to sustain growth in the long term. Reduced air travel costs, rising GDP or disposable income, globalisation are factors which explains rapid growth of the aviation industry.
As a key pillar to create growth, innovation is a masterpiece of the actual economy and the aviation industry stays at the top to propose advanced technologies such as quantum computing or blockchain to improve their profit margin.
In order to understand the catalytic effect of the air transport, we have to present its economic impact:
Fount of notable economic activity, the air transport industry participates to have a substantial impact on employment.
Contributing to produce jobs that serves passengers at the airports, airlines or air navigation service providers also called ASNP, many activities or services provided in the airport that we won’t enumerate in an exhaustive manner but we have check-in or baggage handling that participate to support the economy.
Considered as direct impacts because they cover employment or activity within the industry, direct impacts also include the activities of the aerospace manufacturers selling aircrafts and components to airlines and other businesses.
About the airport sector, the industry account for 6.12 million of jobs which represents 60% of the total of directs direct impacts, where 2.7 million of jobs are provided by airlines and 1.2 million by the manufacturing sector.
Moreover, we also need to add air navigation service providers that permits to employ 233.000 people in the world.
Indirect impacts include employment and activities of the suppliers of the air transport industry, so we will have aviation fuel suppliers, construction companies, accountancy, satellite-based navigation systems.
It represents 11 million of indirect jobs in the world which contributes to improve the supply chain activity of the industry and permits to produce employment.
On the contrary, it appears useful to underline the importance of the indirect impacts especially the supply chain activity that sustain air traffic growth and tourism with a contribution to the GDP evaluated at $ 638 billion.
Expenditures of those directly or indirectly employed in the air transport are defined as induced impacts, they are supporting growth and bringing a contribution of $454 billion to the global economy which cannot be underappreciated.
After a short explanation of the different economic impact that the air transport industry is producing, we need to understand that the airport sector is generating aeronautical revenues and non-aeronautical revenues that produce employment.
Aeronautical revenues are highly dependent of traffic growth, on the other hand non-aeronautical revenues can be classified into “induced impacts”. The main objective of an aerotropolis is to intensify the role of the airport, it will demand a subtle approach in order to develop a quantifiable impact of this concept.
Hence, the development of the aerotropolis will also be seen as a region that grow within an airport and clusters will be determined in order to identify opportunities for higher growth or wages.
At the end, they will form a competitive advantage for the region and rivalry will create innovation.
Nonetheless, at a certain point it’s useful to underline the role of the airport as engine of growth, while we think that at a microscale the airport will generate more revenues with a higher traffic some issues won’t be resolved. Indeed, our role is to discover a model of aerotropolis that will lure enough industries in one point and the airport could act as a catalyst for their activities.
Profitability remains a problem for airports that are supported by governments and airlines, also tourism is another key pillar of this concept due to the fact that aeronautical revenues grows with air traffic.
So, the source of revenues of an aerotropolis is non-aeronautical and clusters should not be easy to form in order to gain a competitive advantage since many countries will have to define their variables that might hamper with tourism.
For example, it will be difficult to create an aerotropolis in a region touched by poverty with a poor infrastructure or volatility of oil prices, tourism will also depend on their political situation.
With a slowing global economy and trade tensions between the United States and China, growth may not be strong, and it could impact each airport that needs to upgrade their infrastructure or invest massively in a large program of refurbishment which can influence revenues at the end of the chain.
Investing in capital expenditures for an airport will lead to capital consumption, governments will have to raise taxation to support the development of their airports.
Thus, airlines will have to change their strategies to preserve their consumer surplus and their profitability will depend on a low airfare to fill their flights.
Passengers will try to avoid airports that are proposing a higher fee than others which results in a low aeronautical revenues and non-aeronautical revenues.
Fostering investment to increase aeronautical revenues is a necessary requirement, moreover a clear path to perform better than other airports is to enhance tourism and political leaders have a great role to play in this area.
Evaluating the impact of the airports on the national economy will permit to understand the complexity of the aerotropolis, a report was made by the Airport Cooperative Research Program underlining the role of the U.S airports in the national economy and the results are quite interesting to evaluate the impact :
In order to determine clusters that might work with the aerotropolis , this research allowed us to extract all informations regarding a possible growth of productivity in various industries.
Pharmaceuticals products, electrical machinery equipments or industrial machinery including computers represents a large percentage of the value, this research permits to understand that an increase of air connectivity enhance the value of each industry and the total contribution of airports to the U.S economy account for 5.8% of national output and 4.9% of the national GDP.
It’s a considerable source of growth for a series of industries and it also permits to create employment at a large scale with 7.6 million jobs across the nation according to the research made by the institute.
All these elements tend to complexify this concept, we believe that implementing a strategy to develop non-aeronautical revenues in a large scale is a better response to shape a new vision of our airports.
Imagine that our airports could be a place for art, businesses and houses, it will lure a wide range of activities and all these businesses are participating to provide enough capital expenditures for the airport to produce a high-quality service for cargo, maintenance, passengers and exports.
Even if the aerotropolis is a creative project for cities seeking growth, the main problem is related to the policy applied by the governments to obtain better results in the tourism area and increase indirect impacts.
Then, another issue is to determine solid and profitable clusters that will attract businesses and people to give birth to the aerotropolis, we think that the aerotropolis should be an component that evolve through time within the airport city, they should determine clusters that could grow with the airport and those clusters can be connected to others industries to accelerate the airport activity.
For instance, a city based on luxury products should include a cluster of luxury industries which is connected to a cluster of transportation industry, textile industry and malls helping to provide their luxury products at a low price.
This type of scheme will increase air traffic and the airport will gain profitability with the airlines, passengers and cargo.
Approving the idea of Kazarda to adapt the aerotropolis to an economy of speed is useful for cities with high quality infrastructure to support their airport, nevertheless most of our economies are facing uncertainties and challenges that requires a certain amount of capital.
The aerotropolis can be considered as a growth opportunity and a catalyzer for some countries developing a strategy to lure heavy industries, for example Dubai Airport however every country should be aware that this concept may be catastrophic if they do not determine clusters to develop in order to gain a competitive advantage.
In most cases, they should observe a discrepancy between cities since each city has developed different clusters to gain their advantage and outpace surroundings countries.
With a slowing economy and a lack of capital, the aerotropolis won’t survive in the long term, we imagined what could be the aerotropolis if clusters weren’t developed to enhance the airport activity.
A futuristic perspective for our aiport cities : A lack of infrastructure and instability could be a serious issue for each aerotropolis.
Being Imaginative and creative, that’s how we create flexibility to react to market changes and gain a competitive advantage.
In the past decade, aerospace players have engaged a process to digitize their supply chain which takes a large percentage of their total costs for OEMs and suppliers.
The Aerotropolis was designed to improve this flexibility and resolve issues regarding higher production rates, inventory levels or the lack of real-time visibility.
The economy of speed to reduce transportation costs or increase air connectivity can be a solution for developed economies but, emerging economies are striving to increase their production rate to outpace their historical growth.
In order to improve their performance, emerging economies are developing their infrastructure and a lack of investment is creating a gap between surrouding countries.
Bridging the gap of infrastructure investment remains a priority for countries struggling with congested roads or volatile oil prices.
As productivity bottlenecks become more intense with a severe lack of clarity and perspective, the issue is to establish a stable framework to promote the aerotropolis or we will yield to abandoned airports surrounded by absence of activity.
In our experience, we are urging governments to create value and we come up with the idea of «Mrotropolis» which draw attention to various countries.
Established in Laos and Malaysia, our MRO project was approved by the Prime Minister of Malaysia and the Prime Minister of Laos in order to produce concrete results in terms of growth in the aerospace industry.
Intensifying productivity of each industry , we are engaged to stimulate growth with the right interventions to significantly boost productivity in the aerospace industry.
Fascinated by new technologies, it’s our duty to reconcile advanced technologies with the aerospace industries to provoke a creative destruction. 3D printing, quantum computing or blockchain technology are innovative answers for the aerospace industry especially MRO.
In case of a higher production rate, OEMs or large suppliers will have to use blockchain as a registry to gather all the necessary informations in order to boost their aircrafts sales and production.
Our project in Laos or Malaysia already ordered an exhaustive analysis to consider all the scenarios to produce more and become cost competitive.
Approved by the Prime Minister of Malaysia, our project aims to address ambitious opportunities to aerospace players established in South East Asia. Global traffic is expected to double in the next two decades with the biggest increase expected in the Asia-Pacific region and economic growth will drive an increases in fleet size and MRO in the region. In order to cope with the demand, we seize our opportunities in collaboration with the government of Malaysia to engage a MRO center in Langkawi to support a MRO growth of 4.0% in Asia-Pacific between 2018-2028. Outpacing our capacities is a challenge in a time of global uncertainty , we aim to capture a portion of the growth in each MRO segment by being cost competitive
Approved by the Prime Minister of Laos, we developed a new facility to become a gateway for global MRO operators who wants to capture a portion of the Asian Airlines market and target a strong growth in terms of profitability in the long term.
A significant shift in growth in the engine segment or airframe segment was predicted by some analysts, the commercial MRO market remains complex and reacting to the market is a difficult task for global operators. Alleviating risk for Asian Airlines, our MRO needs to respond to the expensive visits operated in order to replace or change engines that results after a long period of usage .
About Airport Kinesis Consulting & KINESIS AEROSPACE WORLD
Determined to improve our solutions for the aerospace industry, airports needs to be reinvented to increase their profitability and reduce taxation for households. It’s the time to change our way to design airports and adopt a complex scheme combining financial mechanisms and cutting-edge technologies to realize big cities also called ‘‘aerotropolis’’.
In a period of high uncertainty where investment is a critical part to accelerate the economy and shape our industries, it’s necessary to improve and modify our technical solutions for our clients.
Engaged to transform our design and studies to permit a better relationship between airports and passengers , we are seeking to change our way to travel and propose alternatives
to enhance their return on investment. With our current economic situation , institutional investors needs to be cautiously optimistic and allocate a certain amount to secure their investment. Our role is to provide them all the necessary requirements to ensure that their choice will be an opportunity to participate to shape our society.
REFERENCES
Airport Cooperative Research Program – Transportation Research Board USA. Report ‘ The Role of the U.S Airports in the National Economy’
Air Transport Action Group – Powering global economic growth, employment, trade links, tourism and support for sustainable development through air transport October 2018. Cities and Urban life , Vincent N.Parrillo and John J.Macionis – 2012. Aerotropolis: The Way We’ll Live Next, John Kazarda – 2011.
China’s Aerotropolis : The Zhengzhou Airport Economy Zone – August 2018
Kinesis Group Guideline for MROTROPOLIS – November 2018
All projects are designed and managed by Airports Kinesis Canada and Kinesis Group
Companies for any question or information please contact Airports Kinesis Canada by
email at : info@energykinesis.com.