Domodedovo Aerotropolis Catalytic Economic Effects Moscow Domodedovo Airport.
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Transcript of Domodedovo Aerotropolis Catalytic Economic Effects Moscow Domodedovo Airport.
Domodedovo Aerotropolis Catalytic Economic Effects
Moscow Domodedovo Airport
• The Phoenicians• The Romans and their roads• The Caravansarei of the Silk Road• The Venetians in the Mediterranean• The Portuguese route around Africa• The Dutch and The English in the
Americas and Africa– The first multimodal logistics
platform
History tells a story
Impact of transport nodes on urban form
Charles Horton Cooley, The Theory of Transportation, 1894:Population and wealth tend to collect wherever there is a break in transportation. By a break is meant an interruption of the
movement at least sufficient to cause a transfer of goods and their temporary storage. If this physical interruption of the movement is all that takes place we have what I may call a mechanical break; but if on account of the close relation between transportation and exchange…the physical interruption causes a change in the ownership of the transported goods we have a commercial break (1894; 91)
Today
Mechanical breaks generate logistics activities to support them
Commercial breaks generate financial and legal activities
Charles Horton Cooley
Rail
Air
Road
Sea
Trade transactions take place
Produces Population
andWealth
Attracts real estate Investments, companies to occupy that real estate, residents to serve those companies
The Cooley Model
As a consequence, trade generates more trade and the cycle has begun
Seamless Multimodal
Connectivity
Mechanical breaksCommercial breaks
Applied today
Since Cooley
• Cars and airplanes have changed the transportation world; ships and trains are faster and more efficient
• An air traveler can get to anywhere in the world in 24 hours
• IATA says an airfreight shipment takes on average six days to reach its destination
• Where is the problem?
Economic Effects of Air Transportation
• Direct• Air transportation sector
• Airlines, airports and services, air navigation service providers
• Aerospace sector• Airframes, engines, equipment, off-site service providers
• Indirect• Suppliers, manufacturing, business services
• Induced• Spending of direct and indirect employees on clothing,
manufacturing, food, healthcare, transportation, housing• Catalytic
• Trade, tourism, real estate investment, labor supply, productivity, market efficiency, consumer welfare, congestion, environmental impact
Use of air servicespassengers, freight, express, mail
Generates revenues for companies in the air transport industry, which
Employ staff Earn profit,Pay taxes
Buy goods and services from
suppliers
Indirect ImpactDirect Impact
Spending by employees on other goods and services
Induced Impact
Catalytic Impact
EconomicSpillovers
Trade, tourism, real estate investment, labor supply, produ7ctivity, market efficiency, consumer
welfare, congestion, environmental impact
Catalytic Economic Effects
Larger than direct, indirect, and induced combined
Oxford Economics, Eurocontrol Report, 2005, The Economic Catalytic Effects of Air Transport in Europe
The Hypothesis
• Multinational corporations are not waiting for the challenges to be resolved
• The opportunities to fill the needs of an underserved market are very attractive
• By providing seamless multimodal connectivity for passengers and airfreight an airport can attract these supply chains and their ancillary support industries
• They will need warehouse and industrial sites, specialized logistics operations, commercial and retail sites and support services
• Supply chain footprints are deepening and widening
Where is the opportunity?
As the market of the Russian Federation develops, the supply chains’ investment profiles change
The investment climate in Russia
Export of finished products from origin to Russia
Manufacture of products in country from components imported and produced in Russia
Assembly of finished products from imported components in Russia
Mo
re In
ve
stme
nt
SuppliersSuppliers ManufactureManufacture AssemblyAssembly DistributionDistribution RetailRetail
Outside Russia Inside Russia
SuppliersSuppliers ManufactureManufacture AssemblyAssembly DistributionDistribution RetailRetail
SuppliersSuppliers ManufactureManufacture AssemblyAssembly DistributionDistribution RetailRetail
Relative network strength of airports Objective: gain strength as a hub
Brings apositive cycle ofinvestment and
increased asset value
Brings apositive cycle ofinvestment and
increased asset value
Connectivity and its Positive Feedback Loop
As FDI increases because of the improved connectivity and market attractiveness, frequencies increase
Relative network strength of airports
Behind all this…
• Six days versus one day
• The issues on the ground
• The interests of the citizens and governments of the communities impacted by multimodal transportation
• They all have to be managed
Business
Business
Business
Analysis of Airport Stakeholders David Schaar (Ph.D. Candidate), not member IEEE, Lance Sherry (Ph.D.), Member, IEEE
Stakeholder Relationships
Airport Management andOperations
Airport Infrastructure
Service Providers:Carriers, concessionaires,
air traffic control, etc
Demand Capacity
Airport Organizational Boundary
Debt
Retained earnings
GovernmentFunds
Private Investors
Credit Ratings
PassengerFacility
Charges
Capital Improvement Sources
Airport Service Boundary
Capital Funds
Local Government
Organizations (businesses, non-profits, etc,)
Taxes
Demand
Revenue
Local Community
Noise
Pollution
Traffic
InfrastructureImpacts
Passengers asEconomic
Participants
O&D Passengers
Transfer Pax
Passengers asTravelers
O&D Passengers
Transfer Pax
Demand
ServiceExpectations/Delivery
Municipal Planning Authorities
Demand/Revenue
Capacity/Service
Jobs
Local economy and community
Regulators: Federal Aviation, Customs, Ministries, etc
Airport Cities
• Air transportation is the only global transportation network
• Airport cities grow on the nodes of this network
• Hubs at large metropolitan areas have the greatest relative network strength
• They have an airline base or hub
• Multimodal connectivity that is seamless, fast and predictable is critical to differentiate the airport
• Stakeholder alignment is a fact of life
Characteristics of the Successful Cities
Non-aviation revenues
• Aviation revenues are no longer the core of many airport’s revenue stream
• Airports non-aviation revenues often represent 65-70% of total revenue
• Much of the non-aviation revenue is still passenger focused and within the terminal (retail, service, parking)
• However, new sources of non-aviation revenue are emerging outside the terminal; the drivers are land, connectivity and infrastructure
• Real estate and revenue derived from third parties not directly related to the aviation operation are becoming more and more important (Catalytic Economic Effects)
Non-aviation revenues
Airlines & Passengers Structure
Infrastructure Regional Factors
Share of international passengers
Multimodal connectivity Economic development
Share of LCC passengers Available land Regional infrastructure
Share of transfer passengers
Utilities availability Purchasing power
Share of business passengers
Zoning
Destination mix Master plan Population density
Critical success factors
The investors’ criteria
Business skills•Availability of work force, suppliers•Market knowledge about the drivers of future tenant demand
Business skills•Availability of work force, suppliers•Market knowledge about the drivers of future tenant demand
Location•In-country presence of traditional customer base•Access to transportation network•Multimodal connectivity•High growth rate of lease income•Tenant risk
Location•In-country presence of traditional customer base•Access to transportation network•Multimodal connectivity•High growth rate of lease income•Tenant risk
Design•Modern design•Integration with the community•Place-making, or character of the development
Design•Modern design•Integration with the community•Place-making, or character of the development
Financial•Preservation of capital•Accretive income stream•Cash flow•Deal structure
Financial•Preservation of capital•Accretive income stream•Cash flow•Deal structure
Come from their customers
The risks Investors have filters and they include the evaluation of the following risks
Required Rate of ReturnRequired Rate of Return
Go-No-Go?
Go-No-Go?
Go-No-Go?
Thank You