Strategy

ACV is a pioneer in strategic advisory services for airports. More than 20 years ago, we have started providing strategic support to the Vienna, Salzburg and Kiev airports.
Strategy is a broad definition. In terms of airport development, it always requires a sound market understanding of both regional and international markets. A tailor-made airport strategy has to address the following key questions:

• Vision: What is the airport’s vision? Where will it be in 20 or 30 years? How will development be managed?
• Positioning: Who are the airport’s most important clients and market segments? How can the airport be positioned in a highly competitive environment? Which tariff policy should be chosen?
• Strategic Success Factors: What factors will contribute to the airport’s success in future? Which are the hidden weaknesses and threats? How can the airport’s strengths be turned into opportunities?
• Outsourcing: Which are the airport’s core business segments? Which tasks and services should the airport provide in-house? Which services and tasks can be outsourced - and how?
• Strategic Initiatives: What will be necessary to achieve the business plan targets? How can change be implemented? What does the short-, medium- and long-term action plan look like?
• Scenarios: Which scenario has to be chosen as the most likely one for development? What constitutes a low case scenario and what does the high case scenario look like? What are the risks and what the benefits?

Traffic Forecast

The traffic forecast serves as an important quantitative basis for airport planning - in particular for capacity planning, CAPEX as well as for aeronautical and non-aeronautical revenue planning.
Our traffic forecasts go far beyond mere GDP and IATA forecasts. We take a close look at macroeconomics, the local demand, the catchment area, and the airport’s strategy. Besides that, we analyse the realistic upside potential and any add-on traffic.
The driving factors for the development of air traffic are first, the passenger volumes, and second, the air cargo and airmail volumes. All other projections rely on these - either directly or indirectly.

Our traffic forecasts include:

• Detailed air passenger traffic
• Detailed air traffic movements
• Detailed air cargo traffic
• Peak hour forecasts
• Modal transport split
• Secondary planning parameters (meeters & greeters, visitors, employees, etc.)

The identification and weighting of the various airport operation criteria that affect future cash flows are key to assessing the financial feasibility of the proposed investment programme. In line with the motto “structure follows strategy”, ACV´s Integrated Corporate Planning & Evaluation System (Business Plan) assumes the implementation of key strategic initiatives and thus reflects the future strategy.

All available market data, basic macroeconomic assumptions, the respective air traffic forecast, the capacity plan and all CAPEX figures are then fed into the Investment Planning Model as well as into the Operational & Financial Planning Model.

ACV’s Integrated Corporate Planning & Evaluation System is an quantitative model representation of the airport’s future strategy; it represents in figures the entire airport operations, the development plans, all forecasted revenues and costs, pricing structures, capital expenditure programmes and financing structures.
Our business and financial plans have been analysed, checked and challenged by a number of financial institutions on numerous occasions. We can therefore proudly say that our business plans are bankable documents!

Airport projects typically go hand in hand with high investment volumes. This requires a solid base for making sound decisions.

Three "must haves" for a successful PRE-FEASIBILITY STUDY

Our experts will therefore accurately check and analyse the airport’s three main feasibility aspects. They will define key drivers, development concepts and solutions for each of them. Only if all three feasibility aspects prove positive, will the project be given a go-ahead. Otherwise, more fine-tuning and more “homework” needs to be done until the project management and its shareholders can give the development programme their green light.
To this end, ACV has developed a unique model that integrates and shows the interrelatedness of all three feasibility aspects: 

• the market (e.g. catchment area, traffic potential, airlines, strategy, etc.) and its impact on 
• the technical requirements (e.g. capacities, quality standards, facilities, operation, etc.), and
• the financial feasibility (e.g. aviation and non-aviation revenues, costs, financing, etc.).

Once our feasibility study confirms the project’s viability, it also means that there is sufficient market potential to proceed, all technical requirements will be met and - from a financial perspective – the go-ahead will be supported by the robustness of the business case.

With our exceptional 360° view on airport projects, our integrated planning model and experience in more than 100 airport transactions and 500 airport advisory mandates , we can expertly support our clients in even the most complex and challenging projects.

Our one-stop shop approach brings huge advantages to our clients: no other industrial advisor, technical planner or financial modeller is needed – we provide everything through a single source. This saves a lot of time and costs, facilitates the entire process and minimises the risk of errors occurring.

Our due diligence approach is highly flexible and can be fine-tuned together with the client, depending on the project and its demand. While even parts of our services are helpful, only extensive mandates will add the most value to a project.

Typically, our clients require the following: second opinions, reviews, development concepts, comprehensive airport planning (commercial, technical and financial), feasibility studies, red flag reports, benchmarking, recommendations, etc.

With an unrivalled track record of more than 100 airport transactions, ACV is the best choice for investors and operators aiming to achieve their jointly developed business plan targets. Whenever a project was awarded to one of our clients (in total more than 20 billion EUR of investments) we made sure the new owners would achieve their business plan goals. Please see also our success stories. 

These experiences gained in past operative assignments clearly distinguish us from other consultants in the industry. Our insight into the daily airport business allows us to take an active role and even share risks. Hence, we are a real partner for the long-term development and successful realisation of privatisation projects.
Our services include:

Pre-Bid Services:

• Market screening and monitoring
• Deal generation
• Project evaluation
• “Red Flag” reports
• Pre-feasibility studies, second opinion studies
• Strategic development concepts, including:
  
  • Market assessments and traffic forecasts
  • Technical development concepts, design and planning
  • Business & financial planning
  • Management concepts
  • Organisational concepts and human resources structuring
  • Legal and regulatory framework concepts
  • Marketing concepts and action programmes
  • Operational readiness programmes for future operations
• Transition phase planning
• Bid management
• Consortium structuring
• Project financing & equity participation

Winning bidders will benefit from following services:

Post-Bid Services:

• Management of operational readiness programmes
• Transition phase management
• Turnaround management
• Construction & procurement management
• Project management, control and monitoring
• Sustainable know-how transfers through:
  
  • Technical services agreements or
  • Management contracts or
  • Operational contracts
• Strategic management
• Organisational (re)structuring
• Airline and airport marketing
• Passenger services
• Ground handling concepts
• Concessions management and retailing
• Total Quality Management
• Safety and security management
• Financial accounting & cost accounting
• Controlling
• Exit strategies

Non-aeronautical revenues have become increasingly important for the profitability of an airport, particularly those derived from the retail business. Often, a passenger survey provides the required understanding of the passengers’ behaviour, spending rates and demands. It paves the way for a tailor-made terminal retail concept as well as for overall airport retailing (including the landside areas). 

The objectives of the terminal retail concept are

• to analyze the existing product and outlet mix
• to identify passenger needs and evaluate the shops/outlets accordingly
• to prepare a competitive terminal retail concept (F&B, shops, etc.) in line with the new master plan for the existing terminal(s) and a new passenger terminal (if appropriate)
• to support the client in renegotiations with the core tenants (e.g. DFS, etc.)
• to instruct and train the retail managers for the renegotiations with the other tenants
• to provide a new retail revenue plan based on the proposed terminal retail concept

Together with our partner ADM, we will not only evaluate and enhance existing retail areas and the required layout but will design new central retail areas, complete with e.g. food courts, a unique mix of local specialty shops and high-class brands, and more. In doing so, we take a close look at passenger flows and define those clusters, anchors and magnets that will create a unique airport shopping experience.

Concession management goes one step further and includes, amongst others, the retail concept. It defines the core elements of the concession concept (e.g. legal and commercial terms, planning, integration, etc.), the service level agreements, the major differences between aeronautical and non-aeronautical concessions, the required management tools, etc., and it identifies potential hurdles that need to be overcome..

Concession management is a complex issue. It has a big influence on the airport’s revenues. However, a tailored concession management concept can be used as a guideline for revenue growth and increased profitability. Typically, it includes revenues from the following areas: terminal retail shops, duty free shops, F&B, in-flight catering, rental cars, advertisement, communication and IT, ground handling, lounges, car parking, landside developments, etc. 

The right concession management strategy can make a significant contribution to increasing revenues while reducing costs at the same time.

Believe it or not but there are still airports in today’s world that believe in “Let’s build it, the airlines will come anyway!” Quite honestly, no airline will commence operations to an airport that has made no effort in attracting its main customer. Needless to say, this requires the right tariff structure and a marketing concept that meets the airline’s strategic objectives.  The increasing strength of low cost carriers putting pressure on tariff structures and consequently on the airlines’ profitability serves as a prime example: airports are forced to attract new carriers with innovative ideas and concepts. 

Over the last 20 years, ACV has been active in airline marketing and aviation programmes for a number of major international airports and has carried out smaller assignments as part of overall projects. Experience has shown time and again that our pro-active airline marketing and route development approach will help the airport to identify the right airlines with the right destinations and the right incentives. 

Our ongoing frequent contact to the world’s airlines is key to ensuring a high level of communication and securing potential airline customers for our airport clients. We know, convincing airlines to serve a new destination is a most challenging task. Flexibility, innovative professionalism, the right airline-airport language, international experience, negotiations at eye level and maintaining good relationships with airline decision-makers are only a few of the key criteria that have to be met if airline marketing is to succeed.

Benchmarking is a critical issue – not only in our industry. Especially if only limited data is available one is tempted to compare apples with oranges; and this does not produce reliable results. It does not make sense to benchmark intercontinental hubs against regional airports or tourism destination airports against airports that are mostly used by business travellers. Only airports of the same size and with the same data in terms of main business segments can be benchmarked. Equally important are the catchment area, regional habits (e.g. in local transportation, spending rates, etc), and the selection of the appropriate Key Performance Indicators. 

We collect data. Every single day. After more than 20 years in the industry our database is huge. Combined with our extensive market knowledge, we provide most effective benchmarking methods and models..

With a new corporate strategy as a guideline, airport managers and staff benefit from the significant contributions that our special trainings, employee development programmes and coaching procedures add towards their qualification. Typical training aspects include: 

• Strategic management 
• Human resources management 
• Personnel development 
• Financial and cost accounting 
• Management by objectives 
• Quality management 
• Commercialisation and privatisation: options and effects 
• Higher level of marketing orientation
• Key account management 
• Further airport related trainings for ground handling, catering, etc.