I recently participated in a session at the 6th annual Global Competitiveness Forum, in Riyadh, Saudi Arabia. The overall theme of the event focused on the positive impact of competition on economic and social development around the world. More specifically, I spoke on the emergence of the aerotropolis and the opportunities it presents for the development of cities. As a concept developed by John D. Kasarda and Greg Lindsay in their book “Aerotropolis: The Way We’ll Live Next“, an aerotropolis is an urban form whose layout, infrastructure, and economy is centered on an airport, offering its businesses speedy connectivity to suppliers, customers, and enterprise partners worldwide.
Globalization lies at the root of the aerotropolis. Beginning hundreds of years ago, globalization started with the basic premise of transporting physical goods between nations. As we moved into the 1980s, we saw the emergence of global manufacturing. The 1990s then ushered in the growth of global R&D. Over the last five years or so, we have transitioned into what I call the globalization of the corporate brain. We are beginning to think and act globally about our innovation, growth and talent in the corporate space – it’s all about co-creation and talent. As a global community, we have evolved from the pure transportation of physical goods to the transportation of goods and intellect.
Let’s talk a little about why the aerotropolis has gained momentum. Historically, cities have built their airports on the periphery of their borders. The land area, noise and other issues that come with airports have largely been the reasons behind this. However, times have changed, and in today’s (still) goods-based economy, planners are seeing that this layout is not conducive to developing the local economy.
In the aerotropolis, the goods-based economy is built on a “physical Internet” comprised of hubs and planes. Cities grow when they are able to effectively utilize technology to expand their networks and reach, creating a grid that shortens the distances between neighboring cities. This helps cities, and the businesses within them, to become more competitive as supply chains and networks become an increasingly vital part of how companies gain competitive advantage. Key to this concept is the ICT master plan, which enables holistic planning, delivery and provisioning of services over the network… a fundamental change in the way that cities are built, managed and renewed as well as the way that services are delivered.
The aerotropolis has essentially evolved the role of a traditional airport, moving it from an infrastructure provider to a service provider. The modern-day aerotropolis focuses on megacities, urban development, vertical clusters with top companies and free trade zones. The integration of the airport operations into the city ICT Master Plan becomes even more crucial with airports themselves being deemed metropolitan central cities according to the US Census Bureau’s definition (50,000 ‘residents’). So far, there are 24 aerotropoli worldwide and 31 currently in development. The impact of this becomes very clear when we consider that one-third (or $1 trillion) of the world’s physical goods travel through the air.
Let’s turn to a real life example. FedEx transformed Memphis by making the city’s airport the busiest cargo airport in the world. Researchers from the University of Memphis measured the impact of the Airport on the city and concluded that it was indirectly responsible for nearly half of the local economy – creating 220,154 jobs (one of every three in the region) and adding an estimated $28.6 billion to GDP. Another interesting example that brings the aerotropolis to life is the Schiphol airport in Amsterdam. Considered a major hub in the region, Schiphol is Europe’s second largest airport by cargo, third largest by connectivity and firth largest by passengers. Just like Memphis, Schiphol is an exceedingly successful hub with over 45 million passengers and 1.5 million tons of cargo that passes through annually. To date, the airport has generated 120,000 jobs, maintains 12.5% of GDP and has indirectly added over 1800 foreign companies.
As this shows, there is a significant opportunity for entrepreneurship and job creation in the aerotropolis. Cisco predicts that there will be 50 billion connected devices by 2020 – imagine how this can impact the aerotropolis. The real time connectivity and accessibility enabled by connected devices can effectively be used to generate an additional layer of valuable services. Cisco knows from our Smart+Connected communities that there are many benefits of utilizing the network. Airports benefit from the ability to sell personalized services to their customers, tap into revenue streams from non-aeronautical sources, generate meaningful intelligence to service customers and create additional services that enhance the overall consumer experience and provide reliable security. Major airport have already begun generating a greater share of revenue from non-aeronautical sources. Retail sales from Dubai International have been growing in excess of 20% annually while Incheon International Airport (part of the world’s leading Smart+Connected City), projects nearly $3 billion in retail sales by 2017. Additionally, the Frankfurt International Airport has the world’s largest airport clinic (serving more than 36,000 patients annually), and the Schiphol airport has both an art gallery and the world’s first airport library.
It is estimated that by 2050, 16 billion passengers and 400 million tons of freight will be transported by air. Cities understand that the competition has shifted from nations to cities and from companies to supply chains. For cities to be successful, they must lead in industrial competitiveness, job creation, business location and citizen quality of life. And to achieve this leadership, cities require speed, agility and accessibility. The one clear way to achieve this is through a holistic ICT master plan that unites the city and airport under one umbrella to create, deliver and manage the integrated operations for these future city states. Only then can a Smart+Connected aerotropolis generate the necessary infrastructure and development opportunities needed to guide cities in attaining this leadership.