Cape Town as a global transport hub, CTIA as a booming aerotropolis

SAA’s decision to cancel its direct flights between London and Cape Town has refocused attention on the role of an airport in a city’s long-term economic planning.  Given that competitive airlines such as BA and Emirates are seeing demand for this route increase enough to add flights to their schedules, there is no doubt that – despite SAA’s decision – a unique opportunity exists for Cape Town International Airport to become a thriving aerotropolis and a key player in Cape Town’s becoming a global transport hub.

International trade has become exponentially more important as a factor in the global economy over the past six decades.  Since 1950, world trade by value has increased by 2000 percent, far outstripping global population and GDP growth rates.  Since 1970, seaborne trade has grown by 4% per year, while the volume of cargo sent by air has increased by 9% per year.

During this period, some countries have recognized the potential economic advantage of their global locations, developing themselves as transport hubs. Most notable amongst these is Singapore, which today has the world’s largest transshipment port, handling one fifth of the world’s transshipment traffic and with 85% of the containers passing through its harbours being destined for somewhere else.  Singapore’s Changi Aiport is one of the busiest in the world, with over 6000 flights a week, handling more than 40 million passengers and 1.8 million tonnes of cargo per year.

Others, like Dubai, have more recently followed a similar strategy, of using their location as a cross-road for global sea and air traffic as a facilitator of stellar economic growth.  Panama, long the beneficiary of east-west trade via the Panama Canal, has now recognized the growing importance of north-south trade and is building the brand new airport city of Panatropolis, which is expected to be home to 200,000 people by the time it is finished.

The reason the Dutch chose to settle in Cape Town in 1652 was precisely this locational advantage.  In 1871, however, the simultaneous completion of the Suez Canal and the American transcontinental railroad had a dramatic effect on world trade, ensuring that goods could circle the globe in record time without having to pass the Cape.  This was further exacerbated when the Panama Canal was opened in 1914, and it has remained problematic for as long as the vast majority of international trade and economic activity has been focused in the Northern Hemisphere.  Today the idea of Cape Town using its location as a global cross-road is generally not even considered by those thinking about how to drive economic growth in the region.

However, the world has changed quite dramatically in the past twenty years, and Cape Town’s location must once again be considered an economic advantage.  More and more trade is taking place between the developing countries of the south and east, putting us in the middle of it, more or less equidistant from just about every location that is seeing major economic growth.  We are also able to take advantage of all major forms of transport used in international trade; sea, rail, road and air (and, increasingly, bandwidth).

The last of these forms of transport – air – is the one that seems to currently get the least attention by our national and local authorities, but it is a major opportunity for Cape Town going forward.  For example, it is a little known fact that flying from London to Sydney via Cape Town only takes 90 minutes longer than via Singapore.  A long-haul flight from Singapore to Sao Paulo could, as a matter of course, be broken up with a stop in Cape Town.  And, interestingly, South African Airways is one of only 11 airlines in the world that flies to all 6 inhabited continents.

It is time for Cape Town to consider how it can put its international airport to maximum use.

As Professor John Kasarda, who coined the term ‘aerotropolis’, points out, “Transportation infrastructure has historically shaped business location and urban development.”  Kasarda explains that airports represent the ‘fifth wave’ of transit-oriented urban development, following from highways in the 20th century, railroads in the 19th century, rivers and canals in the 18th century and ocean port cities before that.  Today more than a third of all goods traded in the world – around $3 trillion worth – goes by air.  It is anticipated that, between 2010 and 2030, worldwide commercial air passenger traffic will increase from 4.9 billion to 13.3 billion and global air cargo traffic will triple.  Taking this into consideration, China is planning to build 100 new airports by 2020.

In the way that cities grew up around harbours or railway stations in the past, or the way that Century City has developed around Canal Walk shopping centre, an aerotropolis develops in concentric rings around the airport.  It consists of hotels, conference facilities, offices, retail outlets, residences and light manufacturing and distribution facilities for industries that rely on speed to market for their competitive advantage.  It is important to make sure that the development around the airport is done in a planned manner to maximize the economic benefit, rather than allowing ad hoc expansion.  This requires city and airport authorities to develop a common vision for the future and a plan that enables the airport to become a major driver of local economic development.

Since the redevelopment leading up to the World Cup in 2010, South Africa’s airports have increasingly become places to do much more than just catch a flight, although we are well behind international examples such as Schipol in Holland or Songdo in South Korea.  Globally, the rental of commercial and retail space at airports makes up around 60-70% of earnings, while in South Africa it is around 50%.  This suggests that we have great opportunities for further development.

We are lucky to have the airport that we do in Cape Town, placed as it is pretty much equidistant from the rest of the metropolitan area, right next to the N2, close to the R300, and only 16km from the city centre.  The airport currently processes over 8 million passengers per year, as well as a significant amount of fresh produce and other air cargo.  Facilities built on airport land for companies like Pick ‘n Pay and DHL, as well as others in private developments in Aiport Industria, ensure that the industrial zone around the airport is already responsible for a good deal of manufacturing capacity.  This will be further enhanced by the development of the 14 hectare precinct along Symphony Way that has recently been rezoned light industrial, with about 80,000 m2 of allowable bulk.

All of this suggests that Cape Town International Airport is well placed to develop as an aerotropolis, becoming a busy hub of business activity and the source of significant employment opportunities for the communities based in the under-developed Metro South East.  But we haven’t even begun to scratch the surface of what is possible.

There is a need to work together as the leadership of this city to get national, provincial and local government behind the idea of Cape Town International Airport as an aerotropolis, much as they have done for both OR Tambo and King Shaka airports.  We also need to work jointly in convincing international airlines that Cape Town is well placed to act as a stopover point for long-haul flights, transferring passengers and breaking up bulk cargo for redistribution.  The growing presence of more fuel-efficient long distance aircraft such as the Boeing 787 Dreamliner and the Airbus A380 makes this increasingly viable, and there are currently more than enough slots available at Cape Town International Airport.

Transport access to and from the airport is key to its long-term development potential.  Road access must remain as easy as it currently is, but rail access, whether for goods or people, must also be built into longer term plans.  Services provided by the City advanced so that the area can handle the kind of growth that is possible.  The rezoning of the ACSA-owned land and other privately held land around the airport for mixed commercial, industrial and other use needs to be viewed by the authorities as an intention to improve a potential economic power.  A mix of economic activities will help prevent the airport becoming redundant in case of economic changes.  Therefore the area must be desirable for business to set up offices and for hotels to be developed in order for it to maximise its mixed use potential.

The development of Cape Town as a major international air transport hub needs much more focus.  The airport and its role in positioning Cape Town’s global locational advantage must become a central part of the long-term 2040 vision of the City and Province that is currently under development.  To maximise on the potential of the current airport, planning should commence for the optimal long-term growth in such a way that it earns us growing amounts of foreign currency and creates much needed jobs for the people of the surrounding areas.

By getting all parties behind the development of Cape Town International Airport as a busy aerotropolis, and linking this with the maximization of our other transport hubs like Table Bay Harbour, Cape Town can realize the dream of once again using its global location to take advantage of growing international trade.  In this way the rest of the world can help us provide a better life for more of our people.

Author notes:

Guy Lundy is the CEO of Accelerate Cape Town, a business think tank made up of 45 top corporates in the Cape Town region.

Deon Cloete is the General Manager, Airports Company South Africa: Cape Town International Airport.  Cape Town International Airport was last month awarded Best Airport in Africa at the Skytrax World Airport Awards.