The flight to sustainability for airport operators
Airports, by their nature, hold a lot of land and buildings; they also attract a lot of vehicle traffic. How can they hit sustainability targets and make the most of their real estate?
There are around 20 airports in the UK that are household names, airports that we commonly use to fly on holiday. There are also about another 50 airfields with a variety of operations, from handling small amounts of holiday traffic, business aviation and private charter to flying clubs or air ambulances. All of these airports will have some of a mixture of offices, industrial, retail and hotels, hardstanding in the form of aprons, runways, taxiways and carparks, and open land depending on their size. And all need to be sustainable to reach net-zero targets, but that isn’t the only sustainability challenge.
The aviation industry is awaiting the Department for Transport Jet Zero guidance document, which had its consultation last year. Aside from the obvious target of making aircraft sustainable, there were questions around how to help consumers make greener choices, which puts airport infrastructure in the spotlight.
Making airports greener will require a number of different approaches. And while it will be a challenging process, it also presents an opportunity for airport operators.
Taking existing property first, Sam Folley Partner at Trowers & Hamlins, says the rules around carbon emissions are tightening and will only get stricter.
“Airport operators are going to need to think about retrofitting properties to make them more environmentally sound," he says.
A reasonable amount of airport property will be leased out, which, in the absence of in-house expertise, makes partnering with an established property investor a good option.
Folley explains: “Property companies will have the sustainable building expertise and deals can be structured around a share in rental income. Such partnerships could bring additional benefits for airport operators around asset management and new development opportunities.”
Where there is excess land that falls outside the public safety zones in which development is restricted or prohibited, airports have some advantages for certain commercial uses. The Civil Aviation Authority has recently changed its policy regarding PSZ’s, reducing the areas of land at the ends of runways which are sterilised from development. Airports tend to be easily accessible and close to good road infrastructure. They are also generally located away from residential areas. This makes them prime spots for logistics and last-mile distribution.
Not having residential neighbours who may object to increased lorry and van traffic also means securing planning for light industrial and logistics is likely to be easier. What will need careful consideration is integrating access with regular airport traffic. “HGVs relying on quick deliveries aren’t going to want to be held up by miles of EasyJet customers,” adds Folley.
A lot of the functions of an airport – security, baggage handling, aircraft catering and cleaning, for example, are subcontracted out. But this means demand for offices. While business parks adjacent to airports may have lost some of their appeal, development within the boundary of the airport is of particular value to these businesses. And as a result, they are often prepared to pay a premium.
New airside buildings can be developed to meet high sustainability targets, but there is also an opportunity to use existing or underused space to help reach net-zero. Car parks, hangars and main airport buildings are ripe for roof-mounted solar panels. Open land around an airport which is otherwise unsuitable for buildings, is also a great location for solar panels. It is something being pursued by Edinburgh and Glasgow airports.
With solar power, there is the potential to create an extra revenue stream if excess energy generated can be sold back to the grid. Battery storage can be an issue for urban areas, but airports are more likely to have the space, particularly in areas where other development is prohibited by PSZ’s.
For solar panels, consideration will need to be given to existing structures and how much weight they can support. And there will need to be a risk assessment to check the panels don’t interfere with radar or cause glare for pilots. But Folley says in reality, “it’s rarely an issue”.
Solar power generation could also help with an additional sustainability conundrum: Green transport choices.
Most people drive to the airport and use short or long-stay car parking, making them the perfect place for mass EV charging points.
“I think airports are a bit behind the curve on this one,” says Folley. “You have an audience: A quick charge if you are dropping off or collecting and only parked up for an hour. And, for long-stay parking, the comfort of knowing you are coming back to a fully charged car has got to be a good sell.”
Solar power and battery storage could also help overcome the capacity problem that some commercial landlords or business owners have run into when installing EV charging points for tenants or customers which draw power from the grid.
While you would expect a high energy user like an airport to have sufficient power, probably in the form of a substation, EV charging, particularly at scale, needs to be factored into the overall requirements.
"You have to make sure the power supply for EV charging is economical, commercially viable and sustainable. There is no point in people charging electric vehicles with power generated from unsustainable means."
Given the nature of airports and the assets they have, there are economies of scale that can come into play. With the right approach and expertise, the route to sustainability is clear for take-off.
Don’t forget the ‘S’ in ESG
With the scale of the challenge of reaching net-zero, it is easy to forget the social value part of the ESG equation. But aside from being the right thing to do, there are additional benefits.
Generally, airports aren’t going to be the most popular thing amongst the local community. But one way to overcome that would be to really push social value as well as the sustainability agenda.
One area airports are fairly good at is promoting is apprenticeships employment for young people. If that could be pushed to a local level, that’s got to be a good thing. However, while airport operators may have a social value strategy, the vast majority of people working on-site will be subcontractors and not direct employees. Ensuring social value principles are reflected more broadly through all airport functions, subcontracted or otherwise, is a key challenge.
Often big contracts such as baggage handling are embedded in international law, so it’s not just a case of adding a clause.
Folley believes specific provisions in the leases to airport-based businesses could be used as a driver not only for helping reach net-zero but social value. For example, adding a requirement for tenants to buy energy from a renewable provider or stipulating that a proportion of staff should be recruited locally.