Why the risk profile of European renewables is likely to change

Posted by Macquarie Asset Management

June 09, 2016


Technology to build cleaner and quieter aircraft will be crucial for airports wanting to cater for growing passenger numbers but limit the effects of noise and air pollution on nearby residents.

As globalisation drives growth in air traffic, major airport hubs around the world are looking to expand.

John Bruen, Division Director, Macquarie Infrastructure and Real Assets, says noise and air quality concerns are two of the biggest challenges airport developments face in an era of rising passenger volumes.

"What’s constraining the development of some of the more significant airport hubs globally is the environmental agenda," says Bruen.

"It plays very significantly into airports, and is going to affect how the sector is going to grow in the future."

He says technology to create more efficient and quieter planes will assist airports located in densely populated urban areas.

New generation aircraft such as the Airbus neo range, the Boeing MAX and 787 Dreamliner are less noisy and polluting than their predecessors.

The neo and MAX ranges have been designed to be 14 and 15 per cent more fuel efficient than their predecessors respectively.

The new aircraft have much quieter engines to improve comfort for passengers and reduce noise emissions for people living close to airports.

"These aircraft are quieter than they have ever been before and increasingly environmentally less damaging," Bruen says.

He says the continued progression of technology in this space is important for major passenger hubs such as London’s Heathrow, which has battled noise and air quality concerns in its efforts to expand.

"Technology is a friend in allowing airports to grow in the future," explains Bruen.

"Most airports in urban areas have actual caps on the number of aircraft that can fly in and out on a per annum basis. The argument is that these caps should be allowed to increase because aircraft are making less noise and are cleaner than before."

Bruen says one of the big drivers of demand for travel in and out of Europe is the growing volume of passengers flying from Asia. Many of Asia’s new middle class are travelling for leisure and for business for the first time in their generation.

"Chinese volumes into Europe, if you go back 20 years, was very insignificant, but today there’s a huge drive for growth," he says.

Not only will existing airports need to expand to cater to the growing number of passengers from China and India, new airports, including in regional areas, will also need to be built.

"New airports will certainly have to be created," Bruen says.

"In some environments there will be ability to increase existing capacity but if you have a look at the London environment, for example, the city is already failing to meet capacity at peak times of the day."

He says the question of whether to expand or build anew will be a common one for all airport hubs in years to come.

"This is a debate all European capital cities will have over the next 20-30 years," he says.


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1 New York Taxi and Limousine Commission

2 UK Department of Transport

3 Forbes report: Electric Vehicles cost half as much to drive https://www.forbes.com/sites/jeffmcmahon/2018/01/14/electric-vehicles-cost-less-than-half-as-much-to-drive/#53b655303f97


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