The Allplane Podcast #19 - Managing regional airports, with Jordi Candela
Jordi Candela is the director of "Aeroports de Catalunya, an airport operator owned by the government of Catalonia that manages two regional airports: Lleida-Alguaire and Andorra-La Seu, both located within a 120-miles radius of Barcelona.
What makes this small airport operator interesting for the rest of the industry? Passenger volumes at both these airports are admittedly low, yet, each of them presents an interesting cases of specialization in a very particular niche.
In the case of Lleida-Alguaire (ILD), it has successfully transformed itself into what our guest calls an industrial aeronautical platform: it is currently the point in Europe that keeps more Boeing 737 MAX aircraft in storage and a number of MRO and technical services have been developed on site, it is also home to one of Europe’s largest flight academies and it is launching collaboration projects with several academic institutions and startups in the field of aeronautics.
Even in the middle of this covid pandemic it has embarked in an investment programme that will significantly expand its capacity.
Andorra-La Seu, instead, is a mountain airport primarily providing service to a country other than the one it is located in. There is no space available to fit a runway in the financial and tourism hub that is the Principality of Andorra, a sovereign country nested in the middle of the Pyrenees mountain range. This is a niche market that, once upon a time, had regular air service. After a significant upgrade to its operational capabilities, the challenge for Andorrra-La Seu airport is to develop its activities in two promising areas: boutique-style charter flights for the ski market and air shuttle services that connect Andorra and the Pyrenees region to major air hubs.
In today’s episode we talk with Jordi about the challenges of managing small regional airports and how to find the right positioning in this very competitive market. Our talk is focused on the experience of these two Catalan airports, but some of the points here apply more generally to this segment of the industry as a whole. Check it out!
Download this episode from:
Apple Podcasts / iTunes, Spotify, Google Podcasts or Stitcher
Things we talk about in this episode:
What is Aeroports de Catalunya (“Airports of Catalonia”) and which airports it manages
What is an industrial airport and how it differs from “mainstream” airports
How to transition from a conventional regional airport to an industrial aerospace center
How to provide air services to a landlocked micro-nation
Resources
My article about the inauguration of Lleida airport (quite a few years ago!)
Also from my visit to Lleida-Alguaire airport: inside a Boeing 747 freighter
What happens when a country is too small to have an airport? my piece on CNN about micro-state airports, where I mention the case of Andorra, also mentioned in this episode!
My piece about several (failed) startups trying to become Andorra’s national carrier out of Andorra-La Seu airport
Two pieces of mine on CNN about another industrial airport in Teruel, Spain, this one from 2018 and a more recent one where I review how the covid-19 airline stoppage has boosted activity at storage sites like Teruel and Lleida
A couple of pics of Lleida-Alguaire airport as it looked liked in February 2019:
Podcast Music: Five Armies by Kevin MacLeod
Link: https://incompetech.filmmusic.io/song/3762-five-armies
License: http://creativecommons.org/licenses/by/4.0/
Interview Transcript (coming soon!)
(please note that, although we strive to make it as close as possible to the original recording, the transcript may not be 100% accurate)
Hello and welcome to the Allplane podcast, where we explore different aspects of the aviation industry in the company of expert professionals.
But before we start, let me remind you that you can find these and all the preceding episodes of the Allplane podcast, as well as many other stories about airlines and commercial aviation on our website, allplane.tv
Today we're going to talk about regional airports. But from a very special angle. Our guest has overseen the transformation of a small rural airport with little passenger traffic into a fully fledged aeronautical industrial facility. Jordi Candela is the director of Airports of Catalonia. This is an airport operator owned by the Government of Catalonia, which manages two small regional airports, not far from Barcelona, either wider and Andorra cell, which are both about 100 miles from Barcelona.
We're going to talk about how either way the airport is now the largest storage site for Boeing 737 maxes in Europe and how it's now trying to develop a whole ecosystem of aeronautical activities, from MRO services to flight training, to breaking up and recycling airport aircraft. The other airport jordiz company manages and our sale is instead, a very different kind of airport, a modern airport, whose aim is mainly to serve the tiny Principality of Andorra, an independent country in the middle of the Pyrenees that is a financial and tourism hub.
Here, the goal is to develop niche routes for both the winter ski market and an air shuttle that links the country and the adjacent region to the main hubs in Europe, the main nearby hubs in Europe with planes of up to 70 seats. So that's quite a challenge.
So without further ado, let me welcome Jordi to the podcast to talk about regional airports.
Hello, Jordi, how are you?
I'm fine. Fine. Thank you.
Today we are going to talk about regional airports. Jordi is the manager of Airports of Catalonia, that manages at the moment two airports, Alguaire which is 130 miles west of Barcelona. And La Seu d'Urgell, which is a small mountain airport, next to the border with Andorra. So, Jodi, I think best is first if you introduce yourself, and tell us a bit more about who you are and the position you hold as director of colonial airports.
Okay, yeah, thank you, I have a master Master of Science in transport engineering. And I also have a degree in law and Business Administration and where my background in the airport sector started very far away in 2000. I was working as a manager of infrastructures in Spain at Abertis, a quite important airport group.
Just one comment here, for the audience, Abertis is a large infrastructure operator based in Barcelona, but with operations worldwide. It started in managing toll roads, but then it diversified and it purchased equity stakes in different airports. At some point. It was controlling Luton Airport in the UK, I think, at some point, yeah,
This you know, as you said, this was a toll road operator, afterwards, they acquired some in some states in car parks and also in infrastructure for telecommunications. In 2005, they jumped into the airport business, acquiring TBI, Cardiff Airport, they manage Luton Airport, London, also Belfast International and they had some upper management contracting in the States and also they were the managers of several Bolivian airports.
So then you move from Abertis straight into airports of Catalonia.
Well yeah. I had the opportunity to get involved in the project. It was 2008 when the company started, and I have been working there since then.
Yeah, just a quick note. There are several airports in Catalonia. The most important one is of course, Barcelona, El Prat Airport International Airport in Barcelona, that's managed by a different company. Same as Girona and Reus, which are two airports that used to be Ryanair bases, there's still some low cost activity there. And airports like Alguaire, an airport that was newly created about 10 years ago, in Lleida, which is in the west part of Catalonia, and a small airport that is in a small town in the Pyrenees called La Seu d’Urgell, which is very close to the border with Andorra. And actually, it's considered to be like the National Airport of Andorra, sort of.
Yeah, even if it's not in Andorran territory.
Actually, I want to mention that I wrote an article for CNN some time ago about how the smallest countries in the world manage their, let's say their air gateways. So, I looked at how countries like San Marino, Andorra, Liechtenstein and Vatican City, for example, manage their access by air. So, in most cases, there is not enough space in the country literally to have an airport. So they have to rely on all facilities that are in the neighboring country. So I will put a link to this article in the Episode Notes, so that you can you can check out all these different countries manage their airport access
But there is an agreement between the government of Andorra and Catalonia through which we cooperate
Very good. There's one topic I wanted to touch here in this conversation. And this is how the management of a regional airport differs from managing major airports, because there are two airports you have in managing through your company. They are relatively small. They are in areas that are not they don't have particularly heavy traffic to put it in some way. But there's something very interesting in the story is that you have managed to convert the airport that was originally designed mainly for passenger traffic. And maybe it was designed on a very optimistic basis. It was designed at a time when the economy was growing a lot. There were some projections that maybe were not that realistic in terms of staffing, but the airport was built, the infrastructure is there. And then what you did this last few years is actually reconverted into a more special type of airport and industrial Airport. The main activities of the airport are not commercial traffic, although there is a little bit of that mainly it's an industrial airport, a storage airport and training airport. Can you tell us a bit more about this about what were the challenges that you were finding in the in the let's say in the previous configuration of the airport as it was originally designed, and how?
In the sense you have to understand that, you know, running an airport, or even a regional or a big international airport, is a business with a huge fixed cost. In the sense if you have the interest or to have this infrastructure open and delivering the service you will have to face different fixed costs in order to achieve what we call availability. Having said this, I mean we have to differentiate between, I would say the classic Regional Airport, it's a kind of airport, having a lot of low cost traffic, this kind of airports, maybe they don't receive a huge amount of airport taxes, you know, landing landing fees, passenger fees from the airlines. But on the other hand, they have the opportunity to raise their income through what they are called, you know, the land that non-aeronautical revenues, acting as a landlord. In our case, our passenger base is quite low. Our challenge is to raise activity, we also have to understand that I mean, this kind of airports from a financial point of view, are they difficult for me to become profitable?
How many passengers do you have right now per year in commercial flights?
I mean, I would say a roughly before COVID was between 50 and 60,000 passengers per year. So it's a very low base, this amount of traffic is not enough to face or to balance the cost that we face. So what we are trying is from a financial point of view, but also from a social or economic point of view, considering the economy of the region, we try to raise as many high tech activities and aviation projects that can boost the economy. And in particular, to, you know, to increase their employment and to give more opportunities to labor, which is our major challenge as a public company,
You came up with this idea of making the airport a sort of, I don't know what exact name to describe it is an industrial airport, an MRO airport, a service airport. Airport, what's the right name for what
It's like a Swiss knife that you can use for passenger services for traditional commercial aviation but also for training, you know, these startups and high tech Aviation projects also for storage and for preservation.
And actually, sorry for being referencing previous writings again, but I also would add to the nodes are linked to the article I wrote also for CNN about Lleida airport when I visited in February, I think or March just before the the COVID pandemic when we had the chance to see the airport and visit the facilities take a lot of pictures of the planes you have now on storage there. Because either it's now I don't know if it still is but it used to be at the time, the place in Europe keeping more Boeing 737 MAXes in storage. So you had a few Norwegian and a few Icelandair 737s
We have nine right now.
And plus some other aircraft that were there also for other reasons, there were a couple of Jumbos there were an A330 being broken up there. I remember some other turboprops. I think it was quite an impressive sight to see all those planes there. These last few months, we have seen lots of pictures from places like these all over the world where the airlines are keeping their planes in storage, because basically when you have a plane that is not active for a number of months, you can not forget about it, you need to keep maintenance, you need temporary series on the plane. So, this is where airports like like a they come into play, right you say you have there are some some service providers that built they said base they are the airport and now they are providing all the services to airlines like Norwegian like Icelandair, they're like other other airlines that have a need for the space give their aircraft somewhere.
Yeah, and in addition, what I mean is that our challenge is to work with them and to go to work to cooperate to help them to be more competitive. We will be able to deliver in the forthcoming months a school of technical maintenance there, what we aim for in the case of Lleida is to become a one stop shop for the industry. So, then your people local people will have the opportunity to train and in order to qualify for a good job, being able to train to deliver people qualified for the industry in order that to be able to attract more industrial partners to be based in data and attract more you know this industrial industrial and high tech activity related to aviation.
Let me put it this way, the comparison that comes to my mind is that of for example, like an industrial park, a science or industry park where you have companies there that use some common facilities, because right now you have a company that is doing all these MRO stuff. So they are taking care of planes in storage. They are also breaking up planes for parts and spares for the secondary market. And you also have a flight school right so you're training pilots, international flight school, so you have pilots from many countries. Are they able to train?
Yeah, I mean, we have one of the European leading leading flight school, they used to be based in Lithuania and they, they chose us because of the you know, of the, of the good weather and, you know, the reliability of the facility to cover their needs. I mean, they still have their headquarters there, but they decided to choose Lleida for, for the reliability of infrastructure, and in our flexibility and thanks to training, we have been able to handle more than 30,000 operations in 2019. And to be honest, they are performing quite quite well, during may have been performing quite well during the summer, it is a good complement for our strategy,
Certainly, you haven't suffered that much from the pandemic, because actually a big part of your activity, for example, the storage, while you already had the storage from the Boeing maxes, but you have actually increased right the number of planes that you have in storage during this month
Yeah, we have to slightly increase but, the thing is that in the forthcoming weeks, we will enlarge the apron, we will add two additional aprons that will be able to handle roughly 100 aircraft. So, in this sense, we will multiply our apron capacity three times before three, four times depending on the configuration. So, in the sense, you know, does this crisis has boosted the you know, the investment in infrastructure just to be competitive and to fulfill the industry needs. And also we will complement this investment with the construction of our new hangar with seats expected to have 6000 square meters. So, in this sense, this situation has triggered our investment.
Actually, you just start with what's going to be my next question, which is the business model on this type of report. As you mentioned, you consider it to be more of a landlord as an industrial facility. In a normal airport, you normally have the fees, the charges paid by the airlines for well by passengers ultimately, but also by the airlines. So there's a number of fees per passenger per aircraft per movement. And then there's all the revenue from the shops that ultimately depend on the flow of people. In your case, your business model is a bit different. Can you tell us a bit more about how this works? I mean, do people pay you like a rent to operate in the facilities? What's the business model?
In our case, since you know, our base of passengers is not very high. But also, you know, we don't have these non aeronautical revenues we'll have to rely on the rent. And that's why we have to be very careful because, you know, here we have competition from the United States, where prices are very low. In the case of Europe, we are facing new players offering very low rates. So, in this case, we have to reach a balance between, you know, appealing parking or rent rates being able to justify the public investment that we may have made, we may have to face that. So, that's roughly how our business works. And this is valid for apron spaces, this is valid for office spaces and for any you know, any room and any any land that we may rent.
So, your competitors would be places like the American desert…
We have Mojave, Mojave, Victorville, Marana, Arizona, I mean, I mean this is a global, this is a global industry. And one thing is that we, I mean, our strategy together with the you know, with the study of our partners is to be more focused, you know, on on, we more service oriented instead of price oriented, because, you know, being a public company, you have to be very careful on how we invest our money and, and the return that our investment will deliver to the local economy. And that's that's a challenge I mean, being able to attract traffic to raise activity to be becoming able to provide you know, a nice picture of our aprons, but also providing financial and economic return to the region,
You also have some educational activities right, you have some agreements with universities to test drones and stuff.
Yes, I would, I would put this this I mean, these are these these activities in the nature of our activity, which are you know, the research and development activities like we have the engine tests, also some Vertical Launching test. So, made by you know, by academic institutions, but also we have been the host of many of the tests, a Spanish leading drone company, they are developing a four metric ton drone. So, we have some agreements with several research and development companies, in which they develop the projects linked to space and aviation. So, this is the kind of of projects that raise value to our facility and they help us to build small ecosystems, aviation ecosystems. In this sense, we have been we have clear reference, in the case of United States, along the west coast you have a big commercial airports and in the east part of California you can find several industrial facilities then they become a natural complement to the big commercial airports where platform is a scarce resource and time also is quite scarce. So, in the sense we can provide long term platforms, long term space and you know, quite an isolated environment to develop your project, to become a showroom, because the airport design is quite a unique piece of infrastructure that when people visit they usually fall in love with, we know the terminology.
I will post some pictures on the show note. It's very nicely designed and you can really see that some care has gone into making it a nicely beautiful design building.
It has been awarded with several prizes of architecture and so on. So, yeah, we are quite very proud of the building that we have.
What about La Seu-Andorra airport, any prospects for regular flights there? Because I think at some point, there were a couple of startup airline projects that wanted to link Andorra to the rest of the world, basically. But that hasn't happened. And I think in the 1970s and 1980s, there used to be a shuttle flight with a Fokker 27, I think to Barcelona airport where you could connect with longer haul international flights. And I think that there have been some projects to do this to create some sort of air shuttle from Andorra. the main market for these would be Andorra. There's a banking sector there, there's a tourist tourism sector as well, from ski resorts. So, there was this project, but this hasn't happened yet. What are the latest news? I'm going to post some pictures, but just a note that the airport is located in a very narrow valley surrounded by high mountains, it was actually on a mountaintop that has been cut, literally. So there were some orthographical challenges…
It was more to do to the runway, the runway, 1350 meters length, and the width is 28 meters. So in this sense, now the biggest aircraft able to certify to operate is the ATR 72
You had Elton John, I think, flying from London…
Yeah. He came to a concert or something. And the band, yeah, they came from Germany, I think, with their own charter aircraft…And we have corporate services on a regular basis. For instance, last week, we had commercial flights, you know, corporate executives aviation, so there is a niche for corporate aviation and the airport is becoming more and more popular for this industry. If we talk about regular services, the information we have from airlines is that, now that we have this IFR procedure approved, there is technically nothing that can stop that operation. So now, it's a question of building the market, building the demand. And here, especially at the time that we are facing, you know, regional carriers, they are quite scared to date, you know, these have big financial risk linked to, you know, building a market or new market. And that's, that's why we are in talks with the government of Andorra because there are different options, right, what it's called the public service obligation or tools through which you know, that can be connected from La Seu, which is just 20 minutes away from Andorra to any airport of the world via major European hubs. And that's a new opportunity that citizens from a normal that they are home right now,
Are there any studies about which routes would be priority permanently?
A business plan was just finalized. There are two sources of routes, the ones linked to tourism and is key and you know, connecting with tourists and if you connect with Madrid, in a proper schedule, you will you will be able to take longer flights to Latin America. And if you fly to Paris it is a similar case from a connectivity point of view, Madrid and Paris would be the more logical and reasonable routes to launch The UK is also a big market for ski. For Andorra and also you have the Spanish market, which is quite important also and the Portuguese, some French regionals. And you know, it's key, it's not a big market, but for a regional airport like La Seu doing packages of 50 people…we can not land very large aircraft anyway. But the major challenge is to put the airport in the minds of niche ski providers, there are quite a few of these in Europe.
Interesting, that's definitely something to keep an eye on, and see how these, these efforts to develop this market go, it would be interesting to have such a mountain airport, operating routes to all over Europe, in the near future,
Indeed, in Switzerland, they operate similar aircraft, similar airports are running quite well.
Well, Jordi, it's been very interesting to learn about all these different initiatives that you are developing. So I guess the plans for the future to continue developing in this direction.
That's true began, I mean, here, the challenge is to squeeze the niches where we all have this competitive advantage. So if we have a niche, where we are competitive, then I think we are more flexible, or we aim to be, you know, the most flexible or operator and able to deliver tailored solutions to clients. And I mean, following this strategy, I think that we will continue the success that started with this strategic change at the airport, and continued with the development of La Seu airport as a full commercial facility with the highest industry standards for regional aviation.
So, thank you so much for giving us your vision.
You're welcome.
Again, very interesting topic, Regional Airport development. I'm going to be posting links to all these places that we have been talking about photos, and, of course, other resources so that we can put these things in context. Thank you so much.
Welcome again, and please. Well, everybody's welcome, do not hesitate to contact us, we will be more than happy to show our work and to show our facilities. So great. Thank you very much, Miquel.
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