O.R. Tambo International Airport – Capacity for Change

Brochure

Brochure

O.R. Tambo International Airport, Africa’s biggest and busiest, is part of Airports Company South Africa (ASCA) and a hugely successful example of one of South Africa’s State-Owned Enterprises. In our lead feature EBM speak to general manager Bongewi Pityi about venturing into new markets and the city of Ekurhuleni’s fascinating future as a bustling aerotropolis.

 O.R. Tambo is the largest airport in Africa, handling 20 million passengers and 220,000 aircraft per year. The airport has won numerous international awards – something the company attributes to the hard work and dedication of its employees, who, under the directive of an operating model implemented in 2015 are focussed on providing constant improvements to service quality. O.R. Tambo has invested billions of rand to develop infrastructure that facilitates the seamless movement of passengers and aircraft as well as an enhanced customer experience, and the organisation continues to expand, with some exciting plans for future development.

This level of complexity understandably brings its own challenges. Millions of O.R. Tambo’s passenger use the airport to connect from flight to flight or from flight to land transport, resulting in a wide range of customers with different needs and objectives. These include passengers that require assistance due to physical limitation, first time travellers, and families with small children, all of whom require different kinds of interaction with staff at all levels.

As well as taking care of airport users O.R. Tambo also has been ensuring that all facilities and stakeholders are prepared for the demand, ensuring that all touch points deliver an experience in accordance to their own high standards.

The passenger journey touches upon many different roles within the organisation, which means O.R. Tambo work closely with ACSA in order to ensure that collaboration results in the delivery of an excellent operational experience.

ACSA

O.R. Tambo is one of ten airports managed by ACSA. ACSA’s executive committee, under the leadership of the CEO, is responsible for the day-to-day management of O.R. Tambo, and they share a mission to develop and manage world-class airport businesses for the benefit of all stakeholders.

ACSA itself was formed in 1933 as a public company under the Airports Act. It operates under commercial law and is legally and financially autonomous, while being majority owned by the South African government.

Previously a rather fragmented, parastatal organisation, ACSA has worked since to become a customer driven and focussed commercially successful business, whose airports have since become a jewel in South Africa’s crown. ACSA currently manages nine airports, including the three predominant international hubs of O.R. Tambo, Cape Town and King Shaka International. Its nine airports facilitate nearly 39.5 million passengers.

ACSA has identified its two main revenue streams as aeronautical and non-aeronautical income. Aeronautical is derived from regulated charges or tariffs, consisting of aircraft landing and parking charges as well as service charges from passengers. Non-aeronautical income is generated via commercial activities such as retails, car parking, advertising, hotels, car rental and property leases.

Another source of revenue for ACSA, one that ties into some of O.R. Tambo’s own aspirations, comes from international operations. These have included ACSA’s part in a consortium that took over the management and expansion of Chhatrapati Shivaji International Airport in Mumbai, the success of which has encourage ACSA, and O.R. Tambo, to look for similar opportunities elsewhere. ACSA has said that “such undertakings allow the leveraging of the pool of skills and experience that the Company has amassed over the years to grow the business and increase shareholder value.”

A massive expansion and upgrade in infrastructure, completed in 2010, has led to ACSA maintaining a network of airports that are quickly becoming the envy of the international airports community. Continued focus has been aimed at service quality, which can be seen in the success of O.R. Tambo’s operations and the influence they have, not only on the skies above South Africa but in the community surrounding it, benefiting from the creation of jobs and business opportunities.

O.R. Tambo operations

Bongewi Pityi tells EBM that after the company began in 1993 operations didn’t differ a great deal from the original designs for some time – although in 2013 things started to change. “In 2013 our board took the decision that one of the key things to consider was to rearrange our operating model. That project kicked off late in 2014 when we met with consultants, and the design of the new operating model was commenced in February last year. The work was eventually approved late last year, and we now have the hard task of ensuring that the changes are properly implemented.”

From an operations point of view O.R. Tambo now have technical solutions which look at project management and advice and feedback from other airports worldwide. Cooperation with other industries has also become essential, for example in the development of infrastructure in partnership with construction companies. Pityi also tells us that “We now have a new division called ‘infrastructure and asset management’, which collapses a number of departments we previously had. It’s housed in what we used to refer to as maintenance and engineering – while we continue to maintain our facilities we also need to have a future outlook in terms of new engineering and new approaches, so those departments are now housed in that extra portfolio.”

Another new department key to O.R. Tambo’s future both in Africa and worldwide is business development, where strategic investments will be planned and implemented. This is a key change for O.R. Tambo at a strategic level, and it happens to be the company in the ACSA group for which the change most important.

Venturing into new markets

An important role for O.R. Tambo’s business development department is to emphasise its capabilities to other airport companies around the world and to extol the potential benefits of partnership. This allows the company to focus on the possibility of growth and the creation of new airports.

Pityi describes two recent consultations that have been highly successful to date. “In 2004 or 5 we were awarded the deed to operate in Mumbai, India, and then in 2012 the deed to be an equity partner to a company based in Brazil, to manage an airport. Emanating from that experience the company is now taking the strong decision to pursue strategic investment.”

The business opportunity that Pityi mentions, based in Brazil, involved a partnership with the Brazilian company Invepar and the successful bid to manage the development, maintenance and operations of Guarulhos International Airport in São Paulo, the busiest airport in Latin America.

O.R. Tambo’s business development team is based at the company’s head office, and there has been the recent appointment of a new executive with an excellent track record of leading previous managers, as well as the progressive thinking that such ambitious plans require.

Terminal A refurbishment

O.R. Tambo’s Terminal A is currently undergoing refurbishment – a significant project that, while exciting, has brought the company certain challenges. Construction taking place in an area that must still be operational is a process that must be done efficiently in order that the company’s operations continue smoothly. O.R. Tambo have said themselves that the most important parts of this process are collaboration amongst all stakeholders and effective communication with passengers. Recognizing the importance and support of its stakeholders has led to most decision making during the construction being collaborative, with the focus being reducing impact to customers. Stakeholders are an important part of the value chain in O.R. Tambo’s decision making and are instrumental in the service their customers receive.

In an example of this process, while the Central Terminal Building (CTB) processing point was at saturation during peak travel times, O.R. Tambo ensured that it had additional staff on standby to assist, and the construction program in Terminal A was shortened with 24 hour work activities for the full closure. O.R. Tambo has committed to its stakeholders and customers that Terminal A will be fully operational before the Easter break, and processes have been put in place to guarantee this timeline.

The question of security

Understandably, security measures are one of the first questions asked of airports, and one of their most important concerns. Security threats to O.R. Tambo are monitored daily through their own security department, as well as in collaboration with various government agencies.

Current measures include the deployment of sniffer dogs, which is a proactive method of detecting drugs, explosives and other contraband. The airport has also increased its undercover operations with the South African Police Service (SAPS) and State Security, in order to obtain information and monitor the entire airport precinct. It has also appointmed an IT Security Information manager for the company, focussing directly on the integrity of its network and security against cyber-attacks.

Other vigilant and proactive approaches are implemented when important information is received from other countries. If a threat is detected with South Africa as its target, then meetings are coordinated to ensure information is disseminated correctly and contingency plans, approved by regulators, are put into operation.

Gauteng’s new aerotropolis

The city of Ekurhuleni, which in Tsonga means ‘place of peace’, benefits from being inside Gauteng province, which accounts for 35% of South Africa’s GDP and is regarded as the engine of the economy. O.R. Tambo have partnered with Ekurhuleni in order to develop an aerotropolis there – an area of concentrated infrastructure and development centred on its airport.

The aerotropolis master plan for the city has already been approved, following on from other airports that have successfully implemented similar schemes. From the city’s perspective the creation of an aerotropolis will build on the economic strength of the entire province of Gauteng. In addition, O.R. Tambo will be able to leverage great additional income and offer enormous scope for future job creation, and ultimately support rapid growth and the redevelopment of its communities.

The aims of the project intersect with the government’s national diploma plan, which is seeking to ensure that the government, working with private businesses, improves the health of the job market. This plan aims to tackle South Africa’s high unemployment rate, which in 2014 was sitting at around 25%. Pityi sees the project as an important one in tackling the problem: “Job creation in South Africa is something that is key. An aerotropolis will see a city being developed around the airport, and it’s something that I think is going to very positively make an impact in the region, as well making O.R.Tambo attractive to future investors.”

The key focus of Ekurhuleni’s aerotropolis plans, as stated on the city’s official website, will be to utilise inter-modal connectivity as a basis for generating economic development. This will be particularly aimed at time-sensitive businesses such as bio-life sciences, aerospace, ICT, research and development, and innovation, among others. The project envisages an innovative use of land, investment capital, human resources and logistics in order to form connections with new markets and sources of revenue.

In order to meet this challenge, the Ekurhuleni aerotropolis master plan has proposed five overarching principles. The first is ‘community’ – the desire to form strong neighbourhoods that allow citizens to fulfil their potential. The principle of ‘collaboration’ aims to harness streamlined, effective governance that matches up to global standards. ‘Concentration’ refers to dense transit-orientated developments that add to existing communities. ‘Connection’ – effective logistics efficiently transporting passengers, services and cargo. Finally there is ‘competition’, which will involve identifying the value chains that South Africa can aim to dominate globally.

Considerations for expansion

As the aerotropolis of Ekurhuleni expands, as will the volume of passengers and aircraft passing through it. This means making sure that the increased capacity can be handled: “One thing we need to focus on is having the capacity required both from a passenger and a cargo handling point of view. From a passenger point of view we have the master plan which ensures that we continue to provide the capacity required and that the current level is adequate.”

Pityi goes on to explain one of the capacity issues currently faced by O.R. Tambo – that of the parking of light-bodied aircraft: “We have consulted broadly with the industry on this issue… Jointly produced plans from the industry and other airlines support our future outlook, because for the tariff they are the ones financing the infrastructure of the park. As part of that process one of the key projects is that of having additional aircraft parking space, and as soon as that part of the project is approved by our regulator it will alleviate some of the pressures.”

Pityi identifies the one other area that needs to improve as that of cargo handling facilities. Pityi says that “We partnered with government respected companies and asked them to complete studies for us, which seek to explore what the constraints are from a cargo handling point of view and what it is that we need to do in the short term. Through consulting with them and our cargo handlers we realised that in the next three to five years we will need access to new facilities and so have created plans, starting to initiate economic improvements with the intention of starting construction work to increase capacity in that area.”

This expansion project will complement the city’s development toward becoming a full-blown aerotropolis. Ekurhuleni authorities have approached all of their secondary partners to establish the initiatives best suited to act as catalysts for the creation of infrastructure, and this has included O.R. Tambo and its plans to increase cargo capacity.

Pityi notes that these projects will keep the company, and Ekurhuleni, busy for the next 25-30 years – an exciting time for South Africa’s job market, development, and Africa’s aviation industry as a whole.