ACI World’s new Director General Justin Erbacci discusses his vision for airports in 2025 and beyond, addressing topics like passenger traffic growth, slot allocation reform and sustainability.
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Transcript
David Casey:
Hello everyone and thank you for joining us for Window Seat, our Aviation Week air transport podcast. I'm David Casey, editor-in-chief of Routes. Welcome aboard. For this week's episode. I'm delighted to be joined by Justin Erbacci, the director general of Airports Association ACI World. Justin assumed the role in September 2024 following a career that includes leading NEOM Airports in Saudi Arabia and serving as CEO of Los Angeles World Airports [LAWA] during a pivotal period from 2020 to 2023. His extensive experience also spans roles at Star Alliance, Credit Suisse and United Airlines, among others.
Justin, thank you so much for joining us today. It's great to have you on Window Seat.
Justin Erbacci:
It's my pleasure to be here. Thank you for having me.
David Casey:
So you joined ACI World about four months ago, as I said, having previously worked in the airport sector, including three years as CEO of LAX [Los Angeles International Airport] during what I imagine was a hugely challenging time during the pandemic. How have those experiences within airports shaped your perspective as you transition from running an airport to now representing airports globally?
Justin Erbacci:
Yeah, certainly my time at LAX and I had several roles at LAX including head of innovation and information technology; I was the COO for a while and then I became the CEO and certainly my more than seven years at LAX and LAWA helped me to get a huge amount of knowledge about how to operate airports and what are some of the real challenges of operating a large airport. And we also had a small general aviation airport as well that was part of our portfolio. So it really gave me a great experience in overall airport management and then, of course, going to NEOM [Bay Airport in Saudi Arabia] and being able to work on a greenfield project also helped me determine a lot of that. And along with all the development we did at LAX, certainly gave me a lot of great knowledge around airport expertise.
But even before, and I think what also helps me in this role, is my experience on the airline side, as well. So I spent several years with United Airlines and with Star Alliance on the airline side, and a lot of my time at Star Alliance also involved working at airports and with airports, to determine how our alliance airlines could develop synergies in the way that they operate at the airports. So all of that background both on the airline and the airport side has provided me with than 25 years of aviation experience that is really helpful in approaching this role.
David Casey:
Absolutely, yes. As you said, you've got experience on both that airport and airline side. In terms of your role now, I imagine you've probably been speaking to a lot of your members over the past four months or so. Each of those has different needs, different priorities and different challenges. How does ACI go about representing all those airports given the diverse nature of each of their operations?
Justin Erbacci:
So as you know, ACI is a federated organization, and we have organizations in five regions of the world and each of those regional organizations really provides assistance to our members on the regional level. So they're able to focus on the real regional topics and work with the regional stakeholders. We here at ACI World focus at the global level, and so we work predominantly with the global organizations to try to approach issues and challenges from a global perspective, including working with ICAO and CANSO and IATA, the World Economic Forum, the United Nations groups. And in doing so, we work very, very closely and collaboratively with our regions to make sure that we're aligning our interests at a global level. So that's an important way for us to approach some of the issues that we're facing now in the industry.
David Casey:
Okay, so it's about working with those regional ACI bodies in finding out the challenges and you can apply them then on a global level. What are some of those key challenges that you are hearing from airport members as we enter 2025? What are the biggest obstacles they're facing this year?
Justin Erbacci:
So the major challenges come around being able to make a transition from an era of recovery to an era of growth. We no longer are ... We now see that our passenger numbers are coming back to pre-pandemic levels, and we see that the estimates for growth are significant. We estimate that our traffic will double by 2042, so we need to really work to help the airports to be able to accommodate this growth. And there are several areas in which we need to do that. One of the main challenges though, is as we've recovered from a passenger perspective, airports have not recovered from a financial perspective. They are not profitable generally, and their revenues are not commiserate with the number of passengers coming back. There's still less in airport fees that they're getting and less in non-aeronautical revenues, despite the passenger growth. So this is a challenge to make sure that airports can maintain their economic viability.
Also from a capacity perspective, we need to work with airports to determine how we can help them to increase the amount of traffic they get through their existing infrastructure and then help them in their desires to build additional capacity through airport developments. And then of course, we want to focus on—always on—safety and security and give enhanced focus on improving the customer experience or the passenger experience, which we all know we can apply new technologies and innovations to make the experience much more pleasant, much more efficient.
David Casey:
You mentioned there about maximizing capacity and that is something that I want to revisit later because I think that's an important topic that is pertinent to speak about at the minute. But I just wanted to touch on about current conditions in the market. ACI World predicted that there'll be 9.5 billion passengers in 2024, surpassing pre-pandemic levels, and I think in your New Year message you said that it sets the stage for even more growth in the coming years. You've just said about the traffic doubling by 2042. What's the outlook in the short term? What are you seeing for 2025? Are there any particular regions or markets that are standing out in terms of growth for you?
Justin Erbacci:
Yeah, so we're currently working on our annual ACI World airport traffic forecast, which forecasts the figures for the upcoming year and for multiple years and that we'll release that in Q1, but right now we're estimating that global traffic is set to reach about 10 billion passengers in 2025. The areas that we see the most growth happening over the years are in the emerging markets—Asia-Pacific and India specifically. These are really high growth areas that we see, but we see the growth across the globe.
David Casey:
You talked earlier about airports managing passenger demand as the recovery ... Well, the recovery's in effect happened, hasn't it? We're now in a period of growth. But managing that demand while balancing infrastructure investments and balancing decarbonization efforts, how can airports balance these competing priorities of modernizing infrastructure while meeting those ambitious sustainability goals?
Justin Erbacci:
Yeah, it's a huge challenge and you rightly point out the potential conflicts thereof of trying to increase capacity, maintain customer experience, and improve sustainability. And we're certainly committed to helping our airlines in all of those areas. And this is where you need to use innovative processes, funding mechanisms, technologies to be able to help in all those areas. So certainly we need to use innovative technologies to be able to increase the capacity and the throughput that we can get with the existing infrastructure. And things like artificial intelligence and other innovations certainly can help in those areas to be able to do that. We need to look at how we enable development, sustainable development, moving forward to build new facilities. And that includes looking at different types of funding models that airports can take advantage of in order to be able to fund these new types of developments.
And then working very hard with ICAO and other global bodies to help determine how we can get help for airports to increase their ability to put in more sustainable solutions. And so we'll be working with all of the global bodies to help find ways that we can get regulatory changes, incentives, for helping to improve the sustainability measures and airports.
David Casey:
Presumably that involves a lot of lobbying of governments and working with regulators and stakeholders?
Justin Erbacci:
That's correct, yes.
David Casey:
In terms of the capacity challenges that you mentioned earlier, we're seeing passenger numbers growing and many of the debates that we had in 2019 around capacity crunch, particularly in Europe, we're hearing again. While construction is obviously the obvious solution to address a capacity shortfall, it's not going to be a short-term fix. And IATA recently argued that airports aren't doing enough to maximize the existing capacity that they have. What is ACI World's position on this? Are airports doing enough to optimize the use of their current infrastructure?
Justin Erbacci:
Certainly it's to the advantage of airports to maximize the capacity that they have at their airports, and we are working with airports to do just that and to find new ways to help them to improve capacity even more. So airports definitely are pushing to maximize their capacity because it benefits them in many ways, so they're really incented to do that. I think that you alluded to IATA's white paper on this, and while IATA raises some very valid concerns in that paper, I think it's a little one-sided and unfairly blames airports for inefficiencies. Airports can only do so much and a lot of the capacity and the operations go down to airlines as well. And so when we talk about capacity, it's a very complex issue, especially not only the airspace but also on the ground.
It's a very complex issue and we need to work collaboratively with all of the agencies and all the groups that are part of this, including the airlines, including the air traffic control, to find solutions where we can optimize the capacity at airports. And so that's what we're seeking to do, is we need to sit and work collaboratively with all the stakeholders involved and find solutions that are beneficial to the passengers in the end.
David Casey:
In terms of the slot regulations though, I think one thing that IATA also argued for was that airports should be held accountable. So if airlines, for example, don't use their slots in the 80/20 rule, then they have to return them for the next season. If airports don't deliver the capacity they promised, there's no consequences to that. Should there be? Should airports also be held to account if they don't deliver the declared capacity as promised?
Justin Erbacci:
Well, airports are always held accountable to the extent that they benefit financially from having more throughput through their airports, so they suffer economically when they don't maximize their capacity. So certainly it's to their advantage to try to do that as much as possible. But again, the amount of capacity that goes through an airport is a very complex situation and it involves the actions of many different groups. And so you can't just blame an airport if they don't meet the capacity demands because there are a lot of different variables that go into it and a lot of stakeholders are a part of that equation. And so it's really important that we work collaboratively in order to determine what is the right amount of capacity, taking into account the customer experience as well, so that we're providing as much capacity as possible, but in a manner that is providing a good passenger experience as well.
David Casey:
In your New Year message, I think you also highlighted the role of technology in helping to address some of these capacity challenges. Are there any specific technologies you see as potential game changers for improving slot allocation and airport efficiency?
Justin Erbacci:
Yeah, there are many, and you always hate to talk about technology specifically to—you want to use technologies that are searching for solutions—but certainly I think that artificial intelligence is something that can be leveraged to determine how to optimize capacity both in the airspace and on the ground. So certainly that's something that we would look at. And then there are many others, but I think that's probably the one that will bring us the most benefits in the long term.
David Casey:
Thinking with capacity challenges, and we often see them tied closely to environmental considerations as well. We're seeing some governments putting limits on airport capacity to mitigate environmental impacts. Noticeably, I think, in the Netherlands, the government there's seeking to introduce the annual limit of flights from 500,000 movements at Amsterdam Schiphol, to, I think, it's between 475,000 and 485,000. How can airports, not just in Europe but globally, balance sustainability and environmental goals with the need to maintain connectivity and competitiveness and deliver the capacity that's expected of them?
Justin Erbacci:
Yeah, certainly that's a big challenge that we're all working together to try to resolve. From our perspective, the limitations on flights have often a lot of non-beneficial impacts as well. So airports are really, really important enablers of economic growth in their regions. They create jobs, they create a lot of tourism and business that is essential to the areas. And actually airports, one of the main objectives of airports is to support the economic development of the regions. So by limiting the number of flights in there, there are consequential economic impacts that may not be very desirable, and the monies that can be saved there are better invested in developing sustainable solutions.
And so, we encourage governments to look for ways to incent the ability for airports and airlines—and all the stakeholders at airports—to be able to implement and use sustainable measures instead of what they're doing today. So, I think the better way is for governments to incentivize the ability to use and sustainable measures rather than put limitations that ultimately have negative economic impacts.
David Casey:
Is that message getting through, though? Because we saw, obviously during the pandemic about the economic value of aviation. I think it couldn't have been any more obvious when we were seeing vaccinations and goods and trade and getting through when the whole world was shut down, but yet, as soon as capacity and flights and passengers have come back, we're seeing governments put limits on it. It seems that that economic value and that importance of aviation isn't getting through to governments. What more can be done to make sure that that message is clearer?
Justin Erbacci:
Well, we're certainly trying to work with our counterparts in the industry to emphasize that. We recently worked with the ATAG Group to release Benefits Beyond Borders, which shows what the economic impacts are and what the economic benefits of airports and aviation generally are in an area. And so they're quite stark. We have quite a lot of significant economic benefits to this, and certainly we try to communicate that at all levels at ICAO and in the regions, and to as many groups as we can. Of course, this has become a political issue as well, and so some political groups are using this to advance their political platforms as well. So all we can do is try to continue to educate and emphasize the importance of airports and aviation to regions.
David Casey:
So it's about just basically continuing to bang the drum and to try and get that message across as best you can. Let's wrap up then by focusing on your vision and priorities for ACI World. As we said at the start, you've been in the role for four months or so. Is there going to be any changing direction under your leadership and how do you envision ACI's role in shaping the global airport landscape in the years to come?
Justin Erbacci:
Yeah, certainly, we face a different environment in the airport and aviation landscape. So we are going from a period of recovery to a period of growth. So the emphasis has to change necessarily to now help airports determine how they can accommodate this growth that is going to be coming. So we are working on a new strategic plan that will lay out our vision for the next three to five years, and certainly a big focus of that is going to be on determining how we can help airports to increase their capacity in a sustainable manner. So it's focusing on how do we get the most out of existing capacity? How do we develop new sustainable infrastructure to allow there to be more capacity? How do we help airports remain economically viable during this period while they face the challenges of developing more capacity and making sure it's sustainable? And then also focusing is always on safety, security, and a big emphasis on the passenger experience as well. Really looking for ways that we can make the journey more comfortable, more efficient for passengers.
David Casey:
That's about all we have time for on this week's Window Seat. So I just wanted to thank you, Justin, for being here today and sharing some of your insights, your perspectives on the industry, and laying out your vision for ACI World. Thanks to our producer Cory Hitt, and thanks to you, our listeners. A quick reminder that Matthew Cornelius, the executive vice president of ACI North America, will be one of the keynote speakers at Routes Americas 2025, which is taking place in the Bahamas from the 10th to the 12th of February. You can find out more about attending the event on Routesonline.com. That's all for this week. So until next time, this is David Casey disembarking from Window Seat.
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