Revenue Growth at Dublin Airport

Transcription

1 Revenue Growth at Dublin Airport Jack MacGowan Commercial Director, DAA April 2008

2 Agenda Background A Passenger driven vision Closing the Gap Short term improvements Longer term opportunities

3 Background: In 2005, DAA was performing poorly on several dimensions at Dublin Airport After 10 years of underinvestment, the basic passenger service was poor and getting worse year on year Retail & Car Park businesses needed improving Retail Revenue growth strong, but patchy Strong pax growth, price increases, declining spend/pax, Perceived lack of choice? [Poor availability, Short opening hours? ATMs OOS? Car park business not stable Under managed & confrontational relationship with staff No processes, system (a 12 yr old PC!) crashing daily Inconsistent controls & Abuse by car park users Passengers felt DAA didn t have any plans to make things better

4 Background: The Grim Reality of Terminal Congestion Summer 05 Since 2005, Queues and congestion have been brought under control and 90% of passengers now ge thru in under 7 mins

5 Background: DAA very reliant on Commercial Revenues Lowest Passenger charges in Europe & reducing as a % of total revenue (last 20 years At Dublin Airport commercial revenue accounts for 74% of total revenue Airport No. of Pax (M) Aeronautical Revenue as % Total Rev Commercial Revenue as % Total Rev Copenhagen % 43% Manchester Airport Group % 40% Amsterdam Group % 38% Zurich % 48% Dublin % 74% Source : TRL Airport Performance Indicators 2006

6 Today, DAA are halfway are thru a turnaround growth plan 2004/5: New Board of Directors, CEO & Commercial top team New growth period & investment based on passengers Average Capex/annum ( ) was < 10m Average Capex/annum ( ) will be ~ 200m : New DAA vision - based on the passenger experience 2006: DAA Restructured to deliver the required revenue Separate Commercial Department Key short term External Actions talk to passengers! Show we care and show we are planning a better future 1. Based on a 2bn capex plan over 10 years

7 Today, DAA has a new customer based vision: To deliver a quality airport experience to best international standards to efficiently move millions of people whilst caring for the individual

8 Customer Journey: Finding opportunities in the detail to improve passenger experience & grow Revenues! We ve mapped & benchmarked every step of the passenger journey

9 Customer Journey: A Deep Understanding of the customer helps in two ways First, it helps us see what needs improving - Better allocation of capital Second, it helps us see new revenue opportunities E.g. Passengers love Car park prebooking E.g. We ve upgraded car hire facilities to improve the car hire product (esp. vs. the alternative taxis) E.g. Passengers love good coffee! Starbucks has arrived in Dublin Airport E.g. Loyalty incentives such as Fastrack security checking, pre departure ordering on website, delivery service for Waterford Glass Gifts etc etc

10 The remaining Gap 1 is ~ 50m pa million Airport Operations Retail Car Parks Commercial Property Target Since 2005, DAA have increased its EBITDA from ~ 100mpa to 149m pa in 2008 However, DAA must now grow revenues to ~ 200m pa to fund a 2bn capex plan, to better service higher pax volumes Source: Commercial Gap analysis; 1. Gap = Target of 200m less current level of Operating Profit ( 149m in Budget 08)

11 DAA s current reliance on (maturing) businesses makes this a huge commercial challenge The mix of commercial revenues is changing as traditional revenue sources mature Retail: EU duty free abolished in 1997 Retail: New security arrangements 2006 making retail more difficult (eg liquids restrictions) Car Parks: Greater planning constraints on new carpark capacity (eg Dublin 2007) Constraints in developing future airport infrastructure eg increasing opposition to new runways Step changing revenue growth will come from new revenue sources

12 Nevertheless, there are some ideas for growing these maturing businesses DAAs Retail business? First, we need to create a better retail space to Leverage the rising tide of airport shopping? Retail space will double in T1 in 2009 and triple with T2 in 2010 Second, availability will improve with a new supply chain & logistics centre Finally, non-food/property techniques will increase return on space Customer driven space allocation strategy Optimal balance between concessions & direct retail? Second, how do we innovate & excite more passengers to purchase (to increase % penetration) Very difficult Much better prices/promotions? Convenience Web ordering? Buy & Pickup on return? Delivery service? DAA s Car Park business? Basic segmentation of services with appropriate pricing Considering how we utilise our spare capacity in Winter by applying airline yield mgmt techniques to car parks Should we price car park spaces to fill the car park like Ryanair? Can we change the rules of the game? We are currently developing a JV model with a property developer to dramatically reduce our operating cost model for long term car parking

13 Basic passenger service: Where are we now? Passenger Service levels not where we want them, but now measured and stable Security Queue: 90% of passengers under 7 mins Better Gates: New Pier D vast improvement Doubled restaurant choice airside & Introduced Starbucks, & other great retail experiences landside to improve choice New coach park Vast Improvement in access to airport - 70 new towns around Ireland now have a direct bus link Much More to do Not enough toilets and they are never clean enough Car Park Value for money

14 We are Showing passengers we care ~100 extra CSAs in busy Summer months

15 We ve made it a little easier for passengers to use the airport Book your car parking when you book your flight!

16 And we ve made it a little easier to shop How else can we shake up the shopping experience at Dublin Airport? Expand this delivery service to other categories? Start a Pickup service in arrivals? Allow passengers to prebook/buy over the web and pick up the goods post security check?

17 And there are other opportunities for DAA outside the airport Make the passenger experience better - before they get to the airport! Useful SMS messages to alert them about driving conditions, delays, car park offers etc Possibly extend this service in time, with passenger permission, to retail offers Making airport access easier a bigger coach park to allow more direct public transport services Improving how passengers can use our website Relevant information Relevant offers eg prebooking car park space, retail purchases for pickup etc Can we make the Post airport experience better Narrowband advertising at gates, sell train tickets for destination cities eg (London) Stanstead Express In flight entertainment: DAA currently working with Airvod to understand how we can provide a relevant service for long haul flights

18 Can DAA help improve the post airport experience? The AIRVOD player is the worlds most sophisticated portable in-flight entertainment solution available today. Offering the latest Hollywood movies and complete content customisation for your airline. more movies more television more music more gambling more games AIRVOD - We Make Time Fly!

19 Long Term: DAA s Ambitious Vision for Dublin Airport We will Cater for 35m+ passengers per annum We will Link Ireland directly to every continent Five fold increase in long-haul traffic Terminal 2 in construction Masterplanning next phase of growth 2 nd parallel runway approved Maximise potential of existing asset base by 2025

20 A helicopter view shows a landbank the size of Heathrow (2,400+ acres), located 7 miles from Dublin City Centre 2 nd parallel Northern runway coming.how can we Leverage the other land assets?

21 Hotel & Property Opportunities for DAA Hotels Dublin Airport underbedded by ~ 1,000 beds 1 DAA Plans to increase beds New terminal linked 4 star hotel (470 rooms) Budget hotel planned ( room) Additional capacity from Re-development of existing Clarion Hotel Existing Radisson hotel will create large new business conference centre Property Two airlines recently moved off campus due to lack of appropriate office space? Should we build new aviation related office space? Possible expansion of cargo - Logistics & light Industrial office? New Business aviation facilities needed urgently Source: 1. Tri Consultant study 2007

22 Proposed Crown Plaza 4 star Terminal linked Hotel & DAA Multi Story Car Park Five more of these and we ve closed the gap! This project will deliver a free car park for DAA and annual revenue of approx 5m pa from the hotel

23 Longer Term: Would you locate your European HQ in Dublin? Over 200 acres ( Eastlands ) recently rezoned for development Source:- Dublin Airport Local Area Plan (LAP), 2006

24 Longer term: Could an Airport City in Dublin be an attractive location for MNCs? Dublin Airport Europe s 8 th largest international airport 25million pax in 2008 with Easy connectivity & access to the EU 80 Airlines, 200 worldwide destinations with high frequency on popular routes Ryanair - World s largest international airline Customs Border Protection (CBP) - pre-clearance for US passengers through customs and immigration Dublin Airport has a solution in place for air space congestion and future growth (unlike London & Paris) ie T2 and second Runway. Ireland -a strong track record of attracting MNCs Microsoft, Intel, Google, Ebay, Etc Location, easy to recruit skilled staff, nice place to work, Language, tax etc Dublin has the Fundamentals necessary for a successful Airport City, focused on European HQs for Global MNCs Some frequent routes include: Dublin - London: 46 departures / day Dublin - Paris: 12 departures / day Dublin - Frankfurt: 7 departures / day Source:- DAA Strategic Planning dept.; Aviation Marketing

25 Thank You