Cargo to play a central role at Istanbul New Airport
15 / 09 / 2016
Cargo is set to play a central role in the development of Istanbul’s new airport, which has ambitions to become the largest in the world.
The new airport is being built on a 25-year build, operate and transfer (BoT) basis by the IGA consortium made up of five companies from the construction, energy, tourism, mining, port and airport management industries, each with a 20% shareholding.
The airport, which at the moment goes under the moniker Istanbul New Airport, although that could change, is largely being developed in response to congestion at the city’s current main airport, Ataturk International Airport.
The existing Ataturk Airport, on the European side of Istanbul, cannot meet increasing demand and there is a growing problem of air traffic congestion.
To the north of the airport there are industrial areas and to the east and west there are residential areas.
Road congestion is also a huge problem in the area because of the airport’s close location to the city centre.
Meanwhile, Istanbul New Airport is being built in an old mining area located 35km from the centre of the city on the European Black Sea coast, which will allow plenty of room for it to develop over the four planned phases.
At the Airports Council International Airport Exchange conference and exhibition, Turkish Minister of Transport Binali Yıldırım said that Turkish aviation is growing rapidly.
He explained that when he took over the role in 2005 the country boasted 23m passengers. Today, that number has swelled to 180m passengers.
It decided to opt for a BoT contract because the country’s aviation budget of $10bn per year was far short of the $40bn project cost. However, under the BoT everyone wins, he says.
“We gave them a mining pit and in 25 years we will get an airport,” he says. “We will have the world’s largest airport and they get paid. Both sides are happy.”
When phase one of the new airport opens in 2018 Atatürk will be closed for scheduled flights. At this point, Istanbul New Airport will boast two runways; one measuring 3,750 m in length and the other 4,100 m.
Phase 1b, due for completion in 2019, will add a third 3,750 m runway. By the time phase four is completed in 2028 it will boast six runways, two passenger terminals and have capacity for 200m passengers per year providing links to an estimated 350 destinations, making it the largest airport in the world based on current projections.
But the airport is not just about passengers: cargo volumes are also expected to continue to boom.
Atatürk airport is the world’s 35th busiest in cargo terms according to ACI data for 2013, the most recent available, after recording a 16% year-on-year growth to 650,000 tonnes.
This was the second fastest increase among major airports behind only Abu Dhabi.
At the ACI event IGA chief commercial officer Abdullah Soner Akkurt and business development manager Feridun Özçelik, both ex-Turkish Cargo, explained that Atatürk is expected to handle more than 800,000 tonnes last year, beyond its capacity and up on the 728,000 tonnes handled in 2014.
By 2017, that figure is expected to have reached 950,000 tonnes. Meanwhile, it is hard to increase slot capacity for freighters and cargo charter services at the existing airport.
Akkurt said the new airport will open with an initial capacity of 2.5m tonnes but this could be expanded up to 5.5m tonnes during phase one if it is needed.
The plan is for all operations to cut straight over to the new airport on completion, rather than attempt a dual operation.
When all phases are completed, and if there is the necessary demand, it could offer a capacity of as much as 6m tonnes.
There will be plenty of room for extra freighters too as there will be space for 30 widebody freighters to park simultaneously.
Özçelik said Istanbul New Airport will also boast a single 1.4m sq m cargo city, which can be expanded up to 1.6m sq m.
This is in contrast to the scattered facilities at Atatürk, which would fit into a space of 100,000sq m.
The cargo city, which will be home to online, offline and bonded warehouses, forwarder buildings, Customs offices and other offices, will be located between the first two runways that will be built.
The cargo facilities will be connected to the outside by a dedicated underground tunnel that will run under runways and taxi ways.
Having all buildings located so close together on the runway and with tunnel access should make cargo operations extremely efficient.
The concept has certainly proved successful with customers and Akkurt believes demand will outstrip supply.
The first major customer to be announced is DHL Express. In March the express company signed a memorandum of understanding to set up a 200,000sq m facility in the cargo city.
Discussions with other potential customers are ongoing.
But far beyond just easing capacity constraints at the existing airport, Akkurt hopes that Istanbul New Airport will be become one of the busiest cargo hubs in the world.
Like its passenger operations, the cargo business is mainly predicated on the city’s central location.
In a presentation earlier in the conference, a slide was shown that highlighted that from Istanbul, 40% of the world’s airports can be reached by narrowbody flights and 90% of the world can be reached by widebody aircraft.
This central location, the theory goes, makes it the ideal global hub. But, isn’t this exactly the same selling point used by Middle Eastern airports such as Dubai?
Akkurt agrees that Dubai is centrally located, but jokes that Istanbul is even more central.
He explains that Middle Eastern carriers can reach many European destinations only by using widebody aircraft.
But often the business case for using widebody aircraft to these destinations isn’t strong enough, meaning they are out of scope for Dubai.
From Istanbul, in contrast, narrowbody aircraft can reach these places, opening up more destinations than Dubai can offer.
Istanbul also offers the opportunity for air-truck operations to the Balkan countries, Akkurt says.
But there is also the question of Syria, located on Turkey’s southern border. While Istanbul is located far away from Syria, Turkey was hit with sanctions from Russia when Ankara downed a Russian jet.
The sanctions include a ban on charter flights and travel agents and operators were banned from selling Russian citizens products that envisage visiting the territory of the Turkish Republic.
However, Akkurt and Özçelik aren’t expecting cargo demand projections to be too affected by issues related to Syria, especially given much of the cargo that the airport will process will be transit volumes.
They also say that diplomatic problems are often solved over a couple of years and don’t expect any long-term issues from the Russian sanctions.
However, it is not just transit cargo that the airport hopes to capture. Demand in Turkey is also set to soar.
Turkey currently has the world’s 17th largest economy but aims to join the global top 10 over the next eight years under the government’s 2023 Vision strategic development plan.
Turkish exports were worth $161bn and imports $260bn in 2014. Exports are envisaged to reach $500bn under the plan, and overall international trade $1.2trn.