Our strategic response to challenges and opportunities in our operating environment enabled Airports Company South Africa to maintain sound financial performance and satisfactory airport service levels.
Performance report back
Our performance for the year is summarised below.
Airports Company South Africa runs its airports efficiently and develops them innovatively to maintain service excellence for passengers, airlines and other customers, and to enhance economic growth.
- Integrate data management across our airports to improve efficiency and effectiveness of airport management
- Introduce a key account model of engagement with stakeholders
- Implement a digitisation strategy to enhance customer experience
- Implement transformation strategies in property, retail, car parking and advertising sectors to accelerate inclusive growth
- Manage environmental impacts responsibly
|Envisioned outcomes||Topics raised by stakeholders:||Link to strategy|
The Company derives its revenue from aeronautical and non-aeronautical sources. Aeronautical revenue comprises regulated charges or tariffs such as aircraft landing and parking charges, and passenger service charges. Non-aeronautical revenue comprises commercial income from retail operations, car parking, car rental concessions, advertising, property leases and hotel operations. Non-core revenue is derived from the training academy and the provision of technical advisory and consultancy services in South Africa, other African countries, and further afield.
The Company regards real growth in gross domestic product (GDP) as a key driver of traffic volume growth. During the past three years, growth in our traffic volume exceeded the forecast GDP growth of South Africa and its major trading partners.
Our total departing passenger numbers grew by 4.2% to 20 836 852, with growth achieved by our three major airports as follows:
- O.R. Tambo International Airport: 2.9% increase
- Cape Town International Airport: 5.4% increase, largely attributable to growth in international traffic
- King Shaka International Airport: 7.5% increase, supported by solid growth in domestic travel
International traffic volumes grew by 5.1% with Cape Town International Airport contributing double-digit growth.
- 41.5 million arriving and departing passengers passed through our nine airports, 1.6 million (4%) more than 2017
- O.R. Tambo International Airport remains Africa’s largest and busiest airport, with 21.2 million passengers
- Cape Town International Airport continues to attract the highest number of international passengers in South Africa, with growth of 16%
- King Shaka International Airport continues to grow its domestic passenger base, with 5.6 million passengers representing 7.7% growth
- George Airport was the standout performer of the six regional airports, with 8.5% growth enabling it to surpass the 800 000 passenger milestone
During the peak holiday season in December, international arrivals at Cape Town International Airport grew by 13.9% and international departures by 15.7%. Although domestic air travel was subdued, connectivity between King Shaka International Airport and regional airports grew as smaller airlines opened new routes. King Shaka is classified as a category 2 airport, with reduced landing restrictions and capacity for international flights diverted from O.R. Tambo International Airport.
Growing demand for airline goods transportation resulted in a 9% increase in the total air cargo processed through O.R. Tambo International Airport, Cape Town International Airport and King Shaka International Airport to 504 022 tonnes (2017: 463 482 tonnes).
Despite the growth in traffic, we experienced a 6.4% reduction in the number of aircraft landings as some airlines reduced frequencies and terminated certain routes.
Revenue from aeronautical activities amounted to R3.6 billion (2017: R5.4 billion), segmented as follows:
Revenue from non-aeronautical activities amounted to R3.3 billion (2017: R3.2 billion), segmented as follows:
The increased traffic experienced by our international airports places strain on the infrastructure and operational systems such as aircraft parking capacity, terminal building capacity and baggage handling systems. This is specifically relevant during peak or busy operating periods. The growth in passenger numbers increased pressure on the Department of Home Affairs’ on-site manpower who are struggling to cope with the existing staff complement. This results in long queues at immigration counters, which exacerbates congestion during peak periods in international airports. The delays impact customer experience, on-time performance and reduce the amount of time passengers can spend at retail outlets.
Our airports were impacted by cost-cutting measures applied by some of the state-owned domestic operators to mitigate liquidity and operational challenges. This resulted in a 0.4% decline in seat capacity nationally and a 1.2% loss of available seats at the six regional airports. Lower traffic growth in the affected regions had the knock-on effect of increasing flight cancellations and worsening congestion in airport terminals, which impacted customer experience. These external factors were mitigated by strong growth and operational efficiency achieved by private airline operators.
We strengthened our internal focus on running our airports efficiently and developing them innovatively to accommodate growth, maintain high levels of service, and enhance regional economies to make air travel accessible and affordable to more people. We execute our strategic mandate through the following three divisions.
Client and passenger services
To improve our performance and ensure our sustainability in a competitive global airline industry, it is necessary for us to strengthen our partnerships with our key stakeholders and enable them to achieve their objectives. To achieve this, we implemented a new key account management model to understand and respond to the objectives of each key stakeholder category, including passengers, airlines, airport tenants and suppliers, and tourism bodies. This involved developing a framework and training employees to implement an engagement process for each stakeholder category. We engaged extensively with our airport stakeholders to remove obstacles that prevent us from delivering quality services.
Ground handling services
The Company licences airport handling service providers, such as ramp handling (water services and bussing) and passenger and crew handling (baggage, sanitation and catering). To ensure we maintain regulatory and customer service quality requirements, we are implementing robust quality systems for these outsourced key airport services.
Contracts for these services are due to be renewed during 2018. Ground handling licences are not governed by the Preferential Procurement Policy Framework. As such, the Company drafted its own licensing policy to ensure that it achieves the transformation objectives set out in our ground handling transformation sector strategy.
Transformation in action:
|Ground handling sector strategy||Performance against strategy in 2018|
|Give preference to black-owned businesses when awarding new contracts for ground handling services.||
Business systems and performance
A significant contributor to service delivery is our airport management centre (AMC), the operational hub of all airport activities. The AMC was established to ensure safe and efficient airport services for the airport community. By enabling the coordination between airlines, baggage handlers, security employees, customer service employees, and aircraft engineers, the AMC ensures that our passengers and cargo receive the efficient services needed to enable them to reach their destinations safely and on time.
Following the upgrade of our AMC system at O.R. Tambo International Airport in 2017, we applied the system enhancements at Cape Town International Airport and King Shaka International Airport. The upgraded AMC provides airport management with real-time access to all relevant information relating to flight tracking, peak hour analysis and security. It strengthened operational management, customer engagement and planning by providing data that can be analysed for the purposes of customer segmentation and to determine when airport capacity enhancements are necessary. Although we did not achieve our stakeholder satisfaction KPI , we believe that these measures will enable us to make progress towards achieving this important objective.
The Regulating Committee’s Permission Decision in December 2016 allowed the Company to commence significant airport capacity expansion projects at Cape Town International Airport and O.R. Tambo International Airport over the next five years. Smaller projects will be undertaken at King Shaka International Airport and other regional airports. Once complete, these projects will enable the Company to accommodate future growth in passenger numbers. However, they may have the unavoidable short‑term consequence of impeding certain elements of customer service while construction is underway. We have introduced measures to limit inconvenience for our customers. For additional information on capacity expansion projects, refer to strategy in action.
In addition to our capacity expansion projects, we develop and manage fixed base operations for private commercial aviation. The new purpose-built Fireblade Aviation at O.R. Tambo International Airport opened on 12 February 2018 and offers a world-class facility with a full range of business and charter services. These include terminals, lounges, check-in facilities, and streamlined immigration and customs services for international passengers.
Airports Company South Africa manages airport properties and land development, and provides property development opportunities to market participants through transparent and equitable processes. Property income for the year increased by 13% to R690 million (2017: R612 million). This was in line with expectations due to the stability provided by property rental leases with planned annual escalations and a low number of vacancies, despite the difficult economic environment.
The Company embarked on a programme to develop 1 000 hectares of serviceable land at its nine airports, in alignment with the property transformation sector strategy.
Transformation in action:
|Property sector strategy||Performance against strategy in 2018|
Generate income of R3 billion over the next three to four decades by:
The retail business derives its revenue primarily from core duty-free, foreign exchange bureaus, branded fashion and jewellery airport outlets which are subject to exchange rate fluctuations. Despite the impact of a stronger South African Rand against all the major foreign currencies, retail revenue grew marginally to R1.2 billion. However, this lagged behind the 4.2% growth in passenger numbers primarily due to the Rand’s strength against the Euro, challenges related to airport congestion at immigration and rental reviews on retail concessions that were unsustainable.
- Cape Town International Airport increased retail revenue by 4% to R202 million (2017: R195 million)
- King Shaka International Airport decreased revenue by 2% to R50 million (2017: R57 million)
- O.R. Tambo International Airport continued to contribute the most revenue, with R907 million in adjusted retail revenue (2017: R899 million) reflecting an increase of 1%
As the largest contributor to non-aeronautical revenue, the retail business is key to achieving the Company’s objective of increasing non-aeronautical revenue to 55% of total revenue by 2025. The retail sector transformation strategy supports this objective, while promoting inclusive growth, and has achieved the following milestones:
Transformation in action:
|Retail sector strategy||Performance against strategy in 2018|
Grow retail revenue to R2.7 billion by 2025 by increasing spend per passenger by:
Car parking and car rental
The car parking division’s revenue grew by 2% to R552 million (2017: R539 million), reflecting evolving transport trends, including transport network upgrades, an increase in drop-offs and e-hailing services such as Uber. The Company introduced measures to protect and enhance its revenue, while embracing new transport solutions. These include:
- An increase in parking fees following a five-year freeze on price increases
- A yield management model which adjusts car parking tariffs relative to traffic volumes to increase revenue and optimise utilisation of parking facilities
- Partnerships with public transport providers to introduce park-and-ride services between CBDs and airports
- Negotiation of a revenue-generating partnership with Uber to accommodate its drivers in dedicated parking areas and users in mini-lounges in airport terminals
Income generated by the car rental business grew by 35% to R306 million (2017: R228 million), reflecting strong demand during December 2017. New tenders for car rental concessionaire leases will be awarded as part of the car rental transformation sector strategy.
Transformation in action:
|Car rental sector strategy||Performance against strategy in 2018|
Position car rental facilities at optimal airport locations to increase revenue and maintain 60% of domestic car rental transactions at our airports. Achieve this by:
Revenue from advertising activities declined by 2% to R190 million (2017: R194 million) due to a general reduction in advertising expenditure and postponement of the planned renewal of advertising concessions from December 2017 to 30 June 2018. The purpose of the postponement was to accommodate the award of a new advertising tender issued in July 2017.
Transformation in action:
|Advertising sector strategy||Performance against strategy in 2018|
Achieve R300 million revenue target by 2025 by:
Safety and security
The safety and security of all of our passengers and stakeholders are primary functions of airport management and are managed in partnership with law enforcement agencies. We engaged extensively with the SAPS, state security and the metro police department to strengthen security by vetting, monitoring and rotating airport security employees. We also ensured that security employees are adequately resourced and trained to mitigate and manage incidents at our airports. Prevention and threat response procedures are in place to deal with crises and ensure the continuity of operations. Our safety protocols and systems are reviewed regularly to ensure that our employees and partners have clear guidance on actions to take in the event of an emergency.
Threats to aviation are evolving rapidly as passenger numbers increase and passengers become increasingly dissatisfied with queues and intrusive security measures. We recognise that we need a different, more agile response to counter these customer concerns and emerging threats. We are adopting Smart Security technology which offers an innovative, risk‑based digital system that integrates security and airport operations. Following a pilot study of a Smart Security lane at O.R. Tambo International Airport in 2017, we undertook various interventions to assess our readiness. Due to infrastructure limitations, we are evaluating alternative Smart Security configurations. When fully implemented, the Smart Security lanes will enable passengers to proceed through security with minimal inconvenience. Security resources will be allocated to areas where the potential risk is greatest, allowing airport facilities to function optimally.
Airports Company South Africa is implementing a comprehensive digital strategy to ensure that we adopt and leverage appropriate digital technology to enhance operational efficiency and customer experience at our airports, while protecting our information and systems. In addition to Smart Security, the Company piloted and is preparing to implement self-boarding and self-service baggage drop projects. These form part of the International Air Transport Association’s Fast Travel programme to promote self-service in the aviation industry. The automation of immigration services using biometric technology has been discussed with the Department of Home Affairs and is envisaged to be implemented during 2019.
Our research and development function develops innovative ideas to improve client service and assesses whether new technology is required to drive efficiency. The best ideas are piloted at an airport and, if successful, implemented at other airports. Smart Security, self-service offerings and automated functions are examples of innovative ideas that were developed through this process.
The Company conducts its environmental management, including legislative compliance, through an environmental management system (EMS). In line with materiality as outlined in material matters, the Company provides consolidated figures on environmental performance. The boundary of environmental impacts is restricted to the financial year and materiality.
|Element and metric||2018||2017||Material changes|
|Electricity consumption in kilowatt hours||240 501 415||245 449 263||
Electricity consumption decreased by 2% due to energy-saving initiatives implemented at all nine airports. These included the phased introduction of photovoltaic solar plants to supply renewable energy and installation of LED lights and motion sensors to limit the use of some facilities during non-peak periods. These initiatives have contributed to a reduction in our carbon footprint and facilitated our progress in achieving ACI carbon accreditation.
Plans to develop photovoltaic solar plants as a source of renewable energy gained momentum during the year with the issuing of tenders for plants at the East London Airport, the Bram Fisher International Airport and the Port Elizabeth Airport. The planned commissioning date for these plants is 31 March 2019.
|Water consumption in kilolitres||2 212 623||1 766 931||
Despite the reduction in water consumption by the Cape Town International Airport, the Company’s total water consumption increased by 25% due to:
|Fuel and diesel consumption in litres||636 147||482 378||An increase in the Company’s vehicle fleet and an increase in airside operations due to traffic growth were the main contributors to the 32% increase in overall fuel consumption. We continue to manage fuel consumption by replacing older vehicles and promoting more responsible driving behaviour.|
|Waste recycled in kilograms (millions)||3 833 117||2 977 265||Airports Company South Africa is committed to reducing waste and recycling in support of the requirements of the National Environmental Management Waste Act, No. 59 of 2008. The Company’s continued implementation of integrated waste management plans and awareness campaigns have contributed to the 29% increase in recycled waste. We continue to seek additional measures to divert waste from landfill.|
|Noise management incidents reported||17||24||Noise complaints have decreased by 29% as a result of improved interaction between our noise consultative committees and affected parties. A review of noise levels around our three major airports is scheduled to be conducted in the new financial year.|
|Bird strikes||338||285||The Company strives to protect wildlife that inhabits its airport properties through bird and wildlife management programmes. A 19% increase in bird strikes could be attributed to the increase in airport traffic.|
Mitigating the impact of water shortages in Cape Town
The drought in South Africa, and particularly its impact on the Western Cape, poses a potential threat to the effective functioning of our airports. In addition to the Company’s routine water, electricity and waste reduction processes, Cape Town International Airport has introduced the following additional measures:
- Escalated plans to
reduce demand for water by 50%to 500 000 litres per day (reduced from one million litres to 600 000 litres over the past year)
- Implemented several
water augmentation projects, with the aim of becoming self-sufficient and not dependent on provincial water supplies
- Installing an
on-site filtration and purificationsystem to process water from these sources and feed it into our potable water systems
Water augmentation plans to increase our capacity include:
- Water harvesting from extensive roof structures
- Accessing groundwater from existing and new boreholes linked to a significant aquifer below the airport
- Recommissioning two unused water reservoirs on the airfield to supplement current reservoir capacity
The implementation of major infrastructure investment projects at the airport increases the urgency to conserve and augment water. We estimate that the runway realignment project will require 1.5 million litres daily during peak construction periods.
We have also considered the water requirements of our fire‑fighting facility and are satisfied that our on-site capacity provides adequate fire cover.
The project to increase borehole capacity from 10 000 to 30 000 litres each per hour has commenced, and commissioning of the plant is scheduled for September 2018. Current reservoir holding capacity of 1.8 million litres will increase to 4.2 million litres.
In finding water augmentation solutions for our airports, we are committed to supporting vulnerable communities around our airports, in partnership with local authorities.
Other environmental disclosures:
|Area of disclosure||Material changes|
|Air quality, emissions||The Company achieved ACI level 1 re-certification for O.R. Tambo International Airport, Cape Town International Airport, King Shaka International Airport and Port Elizabeth International Airport. We embarked on a project to apply for ACI level 2 for one of these airports in 2019. Our performance demonstrates the persistent application of our EMS. We continue to measure and report on air quality monitoring at our top three airports in line with the National Ambient Air Quality Standards and SANS 1929 Ambient Air Quality Standard. No transgressions were recorded.|
|Fuel spills||The Company had no significant fuel spills or fines levied for non-compliance.|
|Compliance with laws and regulations||We remain on course to obtain ISO 14001 Environmental Management System Certification (ISO 14001) at all nine airports, using a phased approach to accreditation. Eight of the Company’s airports have been certified on the ISO14001:2015 standard. Cape Town International Airport remained certified on the ISO14001:2004 standard and will be certified on the 2015 version of the standard in 2019.|
Airports Company South Africa will maintain its focus on delivering excellent service to its passengers and other stakeholders. We will leverage our integrated data management system to improve operational efficiency and implement innovative, digitally enabled security and self-service initiatives. This will ensure that passengers at our airports are processed safely and with minimum inconvenience, from arrival to departure.
As we embark on capacity expansion projects, which will impact our airport premises, we will do our utmost to ensure that any inconvenience to our airport stakeholders is kept to a minimum.
We will continue to manage our airports responsibly, ensuring that we contribute to inclusive growth by implementing transformation throughout our operations and managing our airports in a manner that creates value for the South African economy, our employees and the communities around our airports.
The Company achieved ACI carbon level 1 re‑certification for four airports and is applying for level 2 accreditation.
Airports Company South Africa develops its airports and service offerings to maintain quality of service for customers, accommodate growth in demand for air travel, and provide a platform for further growth of our footprint and reach.
- Embark on infrastructure investment programme
- Strengthen project management for more effective project delivery
- Introduce measures to accelerate inclusive growth in construction contracts
- Manage our environmental impacts responsibly
|Envisioned outcomes||Topics raised by stakeholders:||Link to strategy|
We improve and expand airport infrastructure in a manner that leverages innovation and opportunity, while creating value for the broader society in which we operate.
Based on the example of our Cape Town International Airport runway realignment project, the table below demonstrates how our project planning and implementation processes align with our strategic objectives and Sustainability Framework.
Infrastructure and capacity upgrades
Airports Company South Africa is committed to providing world-class airport infrastructure for our stakeholders and the country. Our capital investment programme is developed in consultation with the airline industry to ensure a fit-for-purpose application and adjusted where appropriate to support our strategy. Our infrastructure investments provide significant regional and national economic benefits and are consistent with development and planning policies for the areas in which they occur. Evolving aviation trends are considered to ensure that we remain globally competitive.
The impact of the two-year Permission Decision limited capital expenditure to R891 million (2017: R893 million), which was used primarily for refurbishment and replacement. The Permission Decision enables us to embark on a programme of major infrastructure upgrades to accommodate growth in passenger numbers and the related increase in demand for airport facilities, with R31 billion committed to the programme over the next five years. Of this, R19 billion will be directed to new capacity development and the remaining R11 billion will be allocated to commercial, efficiency, technology, refurbishment and replacement work. The most material expansions of our facilities are at O.R. Tambo International Airport and Cape Town International Airport.
|Strategy in action: Develop airports – Cape Town International Airport runway realignment project||Addressing stakeholder concerns|
|Our people and society||
O.R. Tambo International Airport
The Company will construct nine Code F and seven Code C remote apron stands to provide capacity for more aircraft at O.R. Tambo International Airport. The project is scheduled for completion in 2022. Further investments will be made in capacity expansion projects, including additional bus gates and retail facilities, an additional baggage carousel in Terminal A arrivals, and reconfiguration of existing carousels, all due for completion in 2019.
Plans are underway to develop the airport’s western precinct and midfield cargo terminal to accommodate growing demand and create opportunities for black-owned businesses, in line with the construction sector transformation strategy. The western precinct comprises an 8.5 hectare site, with 180 000 m2 earmarked for mixed-use development (commercial and retail buildings and a hotel) which will be completed in phases by 2020.
In 2018, air cargo processed through the O.R. Tambo International Airport gateway was 399 781 tonnes (2017: 394 430 tonnes). To consistently meet the growing demand from international and local cargo operators, the Company will expand the midfield cargo facilities at the airport. An EIA was conducted and phase 1 of the project was designed in consultation with the cargo industry to accommodate up to one million tonnes of air cargo annually. The facility will have capacity for general cargo, specialised goods, distribution and support services for the air cargo supply chain. Depending on demand, a second phase will increase the facility’s capacity to two million tonnes a year. The project will be implemented over five to eight years.
These and other upgrade or development plans, including the digitisation of airport services, will strengthen O.R. Tambo International Airport’s position as South Africa’s largest airport, enabling it to compete with the most efficient airports globally. Refer to IT and digitisation for details on our digital system upgrades.
Cape Town International Airport
Expansion projects to address capacity constraints, improve retail offerings and increase tenants’ storage facilities are in progress at Cape Town International Airport. The projects include expansions to the domestic arrivals terminal, the international arrivals and departures terminals and the international holding lounge. They are scheduled for completion in 2020 and 2021.
The growth in demand for services at Cape Town International Airport places increasing pressure on runway capacity and aircraft parking facilities. To address this material constraint, the Company will increase runway capacity by 50%. This will be achieved by realigning the primary runway and associated taxiways, increasing the maximum capacity from the current 30 air traffic movements hourly to approximately 40, and providing for new flight paths. We received environmental authorisation from the Department of Environmental Affairs in February 2018, based on an EIA, which paved the way for the project to start. Completion is scheduled for 2021.
The amount of air cargo processed through Cape Town International Airport exceeded the Company’s expectations and offers an opportunity to enhance the profitability of long-haul flights, which have the capacity to carry up to 80 tonnes of cargo. Short-term measures were applied to manage the current growth in demand. Plans to accommodate growth in the medium to long term are being considered.
King Shaka International Airport
A project to extend the Bravo taxiway and construct two Code F aircraft stands is underway at King Shaka International Airport. The project will increase parking capacity for larger international aircraft and is scheduled for completion in 2019.
As we prepare to embark on a lengthy capital expenditure programme, we have introduced measures to strengthen project management and align it with our strategic objectives. This includes establishing an enterprise project management office tasked with creating enterprise-wide visibility of all capital projects and ensuring the adoption of best practice standards across the Company. The Company has adopted 32 project management frameworks that cover the full project life cycle. These will assist in the development of consistent processes and work standards to ensure efficient and effective planning and delivery of our infrastructure development projects.
The capital expenditure programme offers a unique opportunity to accelerate economic transformation in South Africa. The Company developed a construction sector strategy in 2016 that uses various mechanisms to ensure that our capital programme meets our transformation objectives.
Transformation in action:
|Construction sector strategy||Performance against strategy in 2018|
Over the next nine years, our capital expenditure programme will:
The maintenance of airport facilities is an ongoing function of the enterprise asset management division, which provides engineering solutions and maintains infrastructure assets such as pavements, buildings, plant, fittings, machinery and equipment. The division implemented a performance improvement programme to ensure the availability and reliability of key airport assets. During the process, we identified performance impediments, such as bottlenecks in procurement processes. We developed solutions to strengthen performance and improve customer experience.
We focus on recruiting and developing requisite engineering skills to strengthen capacity in the Company and respond to skills shortages. This includes participation in professional associations to ensure that more of our engineers receive the necessary post-qualification training and experience to be recognised as professional engineers.
Unlocking the development potential around our airports
Long-term plans to stimulate growth and create job opportunities around our three main airports, in partnership with provincial and municipal authorities and regional economic and tourism bodies, continue to gain momentum.
A 25-year master plan for the Gauteng city region aerotropolis was approved. The plan boasts a five-year implementation plan to develop catalytic projects that have a high likelihood of creating jobs, building businesses and converting the metropolitan area surrounding O.R. Tambo International Airport into a business hub over time. Our midfield cargo project and western precinct mixed-use development were the first priorities of the plan. A project management unit was established to fast-track other projects identified as being ready for development.
The Cape Town International Airport, in partnership with the City of Cape Town, continues to make progress with two major aerotropolis initiatives. The Swartklip development comprises the False Bay Westlake College, which will provide a skills development programme for local community members; and mixed-use developments with housing, industrial, commercial and retail buildings, and outdoor leisure spaces. The Symphony Way development corridor includes a housing development for informal settlements on the eastern side of the airport and mixed-use developments to accommodate light industrial and agricultural businesses.
The 25-year plan to develop similar business hubs near King Shaka International Airport was approved. The Durban aerotropolis, which is being developed in partnership with the KwaZulu-Natal Provincial Government and Dube Trade Port Corporation, involves a development corridor and a public transport system between Durban and the airport, with mixed-use developments in housing, industry, agriculture, water treatment and small business development.
Refer to the socio-economic development projects table for more on our socio-economic development investments.
Our main focus will be on implementing our capital expenditure programme effectively to ensure that it delivers our envisaged financial, operational and social returns. We are well positioned with processes in place to strengthen project management and align it with our strategic objectives, and we have addressed impediments to the optimal functioning of our airport maintenance service. The mechanisms we introduced in our construction sector strategy will enable us to meet our transformation objectives.
We grow our footprint to increase our capacity and global reach, strengthen our brand and enhance our value creation process.
- Expand provision of airport management services in South Africa and the continent
- Formalise relationships with airport authorities in other countries
- Establish Gauteng Route Development Committee and continue to collaborate with route development agencies in Western Cape, KwaZulu-Natal and Eastern Cape
- Develop more new routes and expand flight offerings on existing routes
|Envisioned outcomes||Topics raised by stakeholders:||Link to strategy|
We achieve growth in our core business activities by responding to the evolving needs of customers and ensuring our infrastructure is able to sustainably support growing demand. Our reputation as an airport business enables us to generate non-core revenue by offering airport management, training and advisory services to other airports, and investing in international airport concessions. Non-core revenue increased to R59.6 million (2017: R50.8 million) primarily due to an increase in the scope of work undertaken at the Kotoka International Airport expansion project for the Ghana Airports Company. This enabled us to exceed the KPI target of R58.8 million.
The primary function of the business development division is to position the Company as a partner of choice in delivering sustainable airport management solutions. The division supports non-core revenue generation through its consultancy and technical advisory services, airport management services, training and investment in strategic international airport concessions. Consultancy and advisory services are key drivers of our strategy to develop and manage world-class airport operations. Our business development division is equipped to pursue partnership opportunities in Africa and abroad. Our traffic development activities in partnership with provincial governments where our three international airports are located, contribute to core aeronautical revenue.
Expanding our domestic and international reach
Airports Company South Africa, through the business development division, provides airport services to local and international airports. Locally, we extended the reach of our brand and expertise to stimulate growth outside the Company by providing 82 man days (2017: 92.6 man days) of consultancy services to non-Company airports in South Africa. This exceeded the related KPI target of 40 man days.
In South Africa, we concluded a five-year contract to provide management and consultancy services to the Mthatha Airport. The Company submitted a business plan for the provision of similar services to Polokwane International Airport, and a proposal for the provision of training services to the Mafikeng International Airport.
In Ghana, the Company is mandated by Ghana Airports Company Limited to manage the construction of Terminal 2 at the Kotoka International Airport expansion project and implement operational readiness and transfer after construction is complete. The scope of our work includes technical design reviews, engineering project management, commissioning of the facility and ongoing operational support. The track record we established on this contract increased the potential for the Company to be contracted for work on other airport expansion projects planned by Ghana Airports Company Limited as it responds to growing demand for aviation facilities in the country.
Several memoranda of understanding (MOUs) were concluded between Airports Company South Africa and airport authorities in sub-Saharan Africa, including the Cameroon Civil Aviation Authority, Liberia Airports Authority and Namibia Airports Company. These pave the way for future collaboration and improve prospects for opportunities to provide airport services.
In a competitive African aviation industry, where airport businesses are capitalising on growth opportunities, bilateral agreements between South Africa and other countries enable us to conclude MOUs to extend services and assist in the development of African airports. Under this framework, we seek to remain competitive by differentiating our advisory offerings with service excellence and solutions based on the understanding we gain of our customers’ operations and challenges.
We seek to develop our footprint as a Company by enhancing access to air travel for South Africans, while increasing air traffic movements and the connectivity of our airports with global destinations. We achieved our KPI target to increase the connectivity index of O.R. Tambo International Airport with a score of 135 (2017: 133). The KPI measures the connectivity index to each gateway linked with O.R. Tambo International Airport, and considers the number of one-stop connections within six hours of the final destination. However, the departing capacity of regional airports remains sluggish, largely as a result of capacity rationalisation and unstable scheduling by certain domestic airlines. As a consequence, our KPI target of a 5% increase was not achieved.
Stimulating regional growth
We continue to strengthen our valuable relationships with route development structures in Gauteng, Western Cape, KwaZulu-Natal and Eastern Cape to stimulate growth of passenger and cargo traffic to our network of airports. We contribute to these partnerships through competitive landscape analysis, market intelligence data and infrastructure to support airlines and key stakeholders in a collaborative manner.
These collaborations play a catalytic role in fostering trade and tourism. They include:
|Gauteng Route Development Committee||Western Cape Investment and Trade Promotion Agency||Dube Tradeport|
In collaboration with key stakeholders in Gauteng, the Western Cape and KwaZulu-Natal, the Company secured increased frequencies from SA Airlink, Fly Cemair, Fly Safair, Austrian Airlines, Eurowings (Lufthasa Group), Air Mauritius and Congo Airways. This equated to eight new routes and 1 348 additional flights from existing airlines.
New routes developed from each airport
|O.R. Tambo International Airport||Cape Town International Airport||King Shaka International Airport|
|Rome to Johannesburg – Alitalia||Victoria Falls to Cape Town – Kenya Airways/SA Airlink||Port Elizabeth to Durban – Fly Safair|
|St Helena to Johannesburg – SA Airlink||Cologne to Cape Town – Eurowings||East London to Durban – Fly Safair|
|Kinshasa/Lubumbashi to Johannesburg – Congo Airways||Singapore Changi to Cape Town (via Johannesburg) – Singapore Airlines|
|Luanda to Johannesburg – TAAG – Angolan Airlines|
|Nelspruit to Johannesburg – Fly Cemair|
Additional new services include the introduction of double daily British Airways Airbus 380 flights between London Heathrow and O.R. Tambo International Airport, and a daily flight from London Gatwick to Cape Town. Alitalia returned to South Africa after a 16-year absence with a route linking Rome to Johannesburg from April 2018. Austrian Air will commence a Vienna to Cape Town service from November 2018. New carriers expanded their flight offerings at our three main airports.
The liberalisation of commercial aviation route rights between South Africa and other countries continues to play an important role in increasing flight frequencies. The negotiation of additional frequencies between South Africa and Angola, which enables carriers in both countries to increase the number of flights from seven to 21 weekly within three years, was enhanced by the ratification by both countries of the Single African Air Transport Market (SAATM). The SAATM was formalised by the African Union in January 2018. A bilateral air service agreement concluded between South Africa and Hong Kong will allow for increased flight frequencies and new routes between the countries, resulting in the planned launch of non-stop Cathay Pacific flights between Hong Kong and Cape Town during the northern winter from November 2018.
Developing expertise in advisory services
The Company’s technical and advisory services offers specialist expertise to all the airports we serve. Specialist expertise is secured from other divisions, where necessary. In instances where certain technical expertise is not available in the Company, we engage with external strategic partners to remain flexible and able to adequately address challenges or service business opportunities as they arise. There is a drive within the Company to develop young talent to bolster internal capacity in support of the 2025 objectives.
Training is integral to the services Airports Company South Africa offers to airports in Africa and other emerging markets. The Company operates a training academy to build aviation skills and expertise in Africa. The academy generated R9.1 million in non-core revenue from its operationally based training, including safety, security and airport management training. Airports Company South Africa is creating customised training courses for individual airport needs.
The Company entered into a 30-year concession to manage the Chhatrapati Shivaji International Airport (CSIA) in Mumbai in 2006 and owns a 10% equity investment in the airport through the concessionaire, Mumbai International Airport Private Limited (MIAL). The CSIA achieved a turnaround to profitability, reporting earnings of R672 million after incurring accounting losses in prior years. The turnaround is attributable to growth in annual passenger numbers to approximately 46 million. Although infrastructure investments increased capacity at the airport, it is now operating at approximately 87% capacity, with limited opportunity for further expansion.
MIAL was awarded a 30-year concession contract to design, finance, build, operate and transfer the new Navi Mumbai International Airport, which will create additional capacity for 70 million passengers and 1.5 million tonnes of cargo.
As part of the CSIA concession award, MIAL was given an option to exercise a right of first refusal for new airport concessions within an agreed radius. MIAL won the bid for the Navi Mumbai International Airport, resulting in an increase in our Company’s shareholding from 10% to 17.4%. Planned improvements in public transport for air travellers in Mumbai are expected to stimulate economic growth around the CSIA, further enhancing the growth potential of our investment in India.
In 2012, the Company was awarded a 20-year concession to manage the Guarulhos International Airport in São Paulo, Brazil, in partnership with the GruPar consortium in which we are a 10% shareholder. Since 2014, the airport has accrued accumulated losses, largely due to the country’s economic recession. However, the Brazilian economy recovered faster than anticipated and the concession reduced its loss by 36% to R483 million.
Further information on our equity investments is available in the message from the Acting Chief Financial Officer.
Airports Company South Africa made noteworthy progress in establishing relationships in South African and other African markets. We are shifting our focus to realising these potential opportunities. With our demonstrated track record as a preferred partner in airport management and solutions, we created a platform from which to secure additional non-core revenue. We will ensure that we continue to differentiate our offering in a competitive market with our experience and service excellence.
Our network of nine airports represents a valuable strategic asset that can be leveraged to develop new and existing routes that increase our connectivity throughout the continent and further afield. We will focus on creating more opportunities for South Africans to access air travel by promoting it as a cost-effective and efficient alternative mode of transport.
Business management and enablement
To effectively execute our strategy, various business functions enable and support our operations, covering all three strategic pillars. These include:
- Human resources
- IT and digitisation
- Communication and branding
The purpose of our human resources (HR) function is to co‑create an environment in which our employees can realise their potential and fulfil their role as a key enabler for creating sustainable individual and Company value, and delivering on our strategic objectives. Our three-year HR strategy, introduced in 2018, is aligned to the Company’s strategy and 2025 objectives and is informed by key global HR trends. The HR strategy is implemented by means of an operating and service delivery model. Performance is measured against HR frameworks and KPIs that dovetail with the Company’s main performance metrics.
One of our main priorities during the year was supporting the transition to the Company’s new governance framework and operating model. We focused on embedding the organisational culture and leadership approach defined by the governance framework and operating model, and ensuring that the Company was adequately resourced to support critical business needs now and in future.
The Company invested R40 million (2017: R54 million) in employee skills development programmes. We strengthened our commitment to the development of young talent by providing bursaries for tertiary studies and offering learnerships and internships, which led to permanent job opportunities or long-term contracts for a record 259 candidates (2017: 135). Our skills development programme is shifting towards a greater focus on skills specific to our Company that will contribute positively towards the availability of skills in South Africa.
Key focus areas
The HR strategy is underpinned by five focus areas to support our strategic objectives. The following table reports our performance against each focus area, the alignment with the Company’s strategic objectives and our plans for the year ahead.
HR strategy in action: Managing and developing a high-performance team
|Focus areas and strategic alignment||Performance in 2018||Planned for 2019|
Contribute to Growing our footprint
Leveraging our human capital to enable the business to grow its footprint
Aligned to: Diversify the business portfolio
Develop business capability
Vision 2025 requires that we optimise our capacity and capability. HR will ensure that appropriate skills and experience are obtained
Aligned to: Increase stakeholder satisfaction through effective partnership; Foster a positive employee workforce and environment
Create an enabling culture
Create a culture of growth, accountability and innovation to support the achievement of Vision 2025 goals
Aligned to: Leadership culture index
Always on people management
Operating in a manner that keeps the end user in mind and ensures that people and the employee experience are positively managed
Aligned to: Foster a positive employee workforce and environment
Developing a Company mindset that goes beyond compliance
Aligned to: Achieve a demographically representative workforce; Maintain and improve our contribution to B-BBEE
To measure progress in the implementation of the HR strategy and the development of an enabling culture to drive the Company’s strategic objectives, we conduct an annual employee satisfaction (ESAT) survey based on five employee value propositions, as illustrated below.
The 2018 ESAT survey score of 3.54 (2017: 3.31) was below our KPI target of 3.80 , but higher than the prior year, which could be attributed to a more stable environment following the implementation of the new governance framework and operating model, and the positive effect of increased employee engagement. The ESAT score, combined with an employee turnover rate of 6.0% (2017: 5.18%), indicates that we are an employer of choice.
Refer to the recognition section for our top employer status achievement.
There were 198 (2017: 67) promotions, 174 (2017:145) terminations and 249 (2017: 110) appointments in the year.
We strive to reflect the demographics of our country. While our workforce reflects an improvement in representation of black employees, which is 93.3% (2017: 92.7%) within the economically active population, our female representation remains unchanged at 44.9% of the total workforce of 3 0761 (2017: 2 990).
Workforce profile per year
|1||The value represents the employment equity stats inclusive of permanent and contract employees with 3 months or more with the Company.|
Increased employment of women remains a focus for Airports Company South Africa, with 44.9% (2017: 44.9%) of its workforce comprised of women. This relatively high workforce representation allows us to develop a strong talent pool for future senior positions and leadership roles. It also supports increased female representation in the professionally qualified and senior management occupational levels.
A dedicated gender task team was established to identify opportunities to increase the female talent pool in technical and scarce skills categories through skills development.
People with disabilities
The Company continues to experience a challenge in employing people with disabilities. We employed 50 people with disabilities (2017: 54), which is 1.6% (2017: 1.8%) of our total workforce and well below our target of 80. Achieving our target requires specific interventions, including awareness of the needs of people with disabilities and provision of reasonable accommodation. We continue to apply these interventions and are exploring additional measures to attract and retain people with disabilities.
Improving the lives of our people
Airports Company South Africa goes beyond mandatory employee benefits to empower, develop and create opportunities for its people to improve their livelihoods. This approach, in turn, assists the Company to attract and retain talent. Two major interventions to improve the lives of our people are our housing and transport schemes.
The purpose of the scheme is to increase employee home ownership and provide dignified accommodation. The scheme offers qualifying salaried employees the following benefits:
- An upfront lump sum deposit to enable first-time homeowners to purchase a home
- A monthly housing subsidy to reduce the burden of bond repayments
- A monthly rental subsidy for three years to assist qualifying employees to improve their accommodation and reduce the rental burden as a step towards preparing them for home ownership
- Training in financial management and responsible home ownership
The number of participating employees increased to 1 325 (2017: 1 088).
Housing scheme participation
Since the scheme’s inception in July 2016, the Company has invested R67.9 million as follows:
- R37 million to assist employees purchase their first homes
- R26 million to assist employees to address and resolve debt to purchase a home
- R4.9 million to assist employees access better rental accommodation
We have approved a transport scheme which will provide safe, reliable and affordable transport to our employees during periods when there is limited access to public transport; 2 533 permanent and 140 temporary employees will be eligible for the transport scheme.
The procurement process was completed in 2017 and the transport solution will be implemented in 2018. We have appointed 19 transport service providers and integrated them into our ESD programme, which will empower them to sustain and grow their transport business beyond the life cycle of the contract.
Through the ESD programme, Airports Company South Africa entered into a memorandum of agreement with Mercedes Benz Financial Services (Mercedes). The Company and Mercedes each contributed 5% and 15%, respectively of their ESD budgets towards the capital outlay of vehicles purchased by the service providers.
Supporting learning for employees and their children
Our employees create the opportunity to become prosperous if they participate in studies to further their education and progress their career. The Company offers a bursary programme for tertiary studies, including courses relevant to the business, enabling employees to develop their own career prospects. R5.8 million was invested in the bursary programme (2017: R6.0 million).
Providing young South Africans with access to quality education is critical to the future of our country and aligned with our transformation strategy and the NDP. We invested R4.9 million (2017: R4.6 million) in a bursary scheme for the children of our employees to study tertiary degrees and courses in subjects on the list of national scarce skills. We reinforce this commitment by sponsoring tutorship through professional learning institutions in mathematics, physical science, life science and accounting to strengthen proficiency in these subjects. This is combined with work experience opportunities to prepare students for the world of work.
The health and wellness of employees significantly impacts their ability to function optimally at work, at home and in other areas of their lives. The Company provides access to health and wellness services through face-to-face or telephonic counselling, which supports employees in managing their physical, emotional and psycho-social wellbeing. This includes a Company-sponsored executive wellness and neuroscience-based medical assessment for the leadership team.
Trade union relations
Airports Company South Africa recognises the right of all employees to belong to trade unions and participate in collective bargaining. The Company endeavours to maintain sound relationships with organised labour through regular consultation and engagement. This approach contributes to stable relations, despite changes in South Africa’s organised labour environment, which have resulted in an increase in the number of trade unions that represent our employees. The National Education, Health and Allied Workers Union (NEHAWU) and the National Transport Union undertook a verification of their membership in an open and transparent manner, with no formal disputes on the outcome of the process.
By year-end 60% (2017: 51%) of our workforce was unionised as follows:
- NEHAWU: 28%
- National Transport Movement (NTM): 25%
- National Union of Metalworkers of South Africa (NUMSA): 7%
While NEHAWU and NTM currently enjoy organisational rights granted by the Labour Relations Act, NUMSA is not sufficiently representative in the Company to be granted organisational rights.
Wage increases granted in 2018 were within the parameters of a multi-year wage agreement concluded with NEHAWU in 2017. The agreement supported the maintenance of a stable labour environment.
According to the Integrated Transport Sector Codes in line with the National Land Transport Act of 2009, the Company is a Level 2 contributor. Our performance against the B-BBEE scorecard elements is recorded in the following table:
|B-BBEE scorecard elements||2018||2017||2016|
|Management and control||3.82||4.14||8.84|
|Total points achieved||88.31||79.56||94.17|
B-BBEE business spend
Our procurement expenditure represents a significant opportunity for empowerment, and we continued to increase our procurement from all empowering suppliers as follows:
- Our procurement spend from suppliers that are at least 51% black-owned, based on applicable B-BBEE recognition levels as a percentage of total measurable procurement spend (TMPS), amounted to R1 588 952 765 (2017: R1 124 079 251). This represents 61.7% (2017: 46%) of our TMPS and exceeded our KPI target of 48%
- Our procurement spend based on procurement recognition levels, as a percentage of TMPS, amounted to R2 982 093 113 (2017: R2 447 547 935), representing 116% of our TMPS
|Preferential procurement analysis1||2018
|B-BBEE procurement spend from all empowering suppliers based on the B-BBEE procurement recognition levels as a percentage of TMPS||116||113||110||Our continued focus on ensuring that suppliers are B-BBEE compliant generated an increased spend of 2.39%.|
|B-BBEE procurement spend from all empowering suppliers who are qualifying small enterprises based on applicable B-BBEE recognition levels as a percentage of TMPS||28||21||23||Various developments to embed transformation activities in procurement processes led to a 15% increase in spend on qualifying small enterprises.|
|B-BBEE procurement spend from all empowering suppliers who are at least 51% black-owned, based on applicable B-BBEE recognition levels as a percentage of TMPS||62||57||47||The 10% improvement underlines our thrust on transacting with businesses that adopt our transformation objectives and that are willing to sub-contract to enterprise development suppliers.|
|B-BBEE procurement spend from all empowering suppliers who are at least 30% black women-owned based on applicable B-BBEE recognition levels as a percentage of TMPS||35||30||20||The focus on procurement spend on black women-owned suppliers realised a 5% increase.|
|1||The Company applies an equivalent Rand value to the percentages applied for reporting purposes.|
The Company achieves significant empowerment through its support of black entrepreneurs as reflected in the growth in the black business share of commercial revenue from 50% in 2017 to 59%. This exceeded the KPI target of 48% , partly as a result of the positive impact of the new transformation sector strategies that became operational during the year. It also exceeded the new 50:50 ratio of black-owned business prescribed by the supply chain management policy.
Other factors that contributed to the growth of our contribution to black entrepreneurs were our investment of R12 million in enterprise development (2017: R10 million) and an improvement in our supply chain management process to remove bottlenecks in the management of procurement processes.
View for additional information on supply chain management.
Socio-economic development projects
One of the many ways in which Airports Company South Africa contributes to enterprise development and social upliftment in South Africa is through our socio-economic investment programmes. We support socio-economic development (SED) projects near our airports in six focus areas that are aligned with our strategic objectives: education, women and youth empowerment, environmental sustainability, disability, skills development, and philanthropic donations and employee volunteerism. During 2018, we invested R44 million (2017: R39 million) in our SED programme, R4.9 million of which is spent on communication campaigns and project activation.
The balance was allocated to our focus areas as follows:
|Focus area||Projects||Investment||Return on social investment|
Teacher and learner development in the Eastern Cape: Saturday and holiday classes in maths, science, accounting for grades 10 – 12
School infrastructure support in partnership with the Department of Transport in Mpumalanga
|Women and youth empowerment||
Goodbye Malaria: We provided kiosks at O.R. Tambo International Airport, Cape Town International Airport and George Airport to develop young retail entrepreneurs, while supporting the fight against malaria.
Hygiene and environmental programme: We partnered with a black female industrialist to fund increased capacity for the manufacture of toiletries and sanitary towels and a hygiene awareness programme at Gauteng schools.
Tshimologong: In partnership with the University of the Witwatersrand (Wits), we introduced a three-year incubation programme to provide unemployed youth with entrepreneurial skills.
|Environmental sustainability||Nature Guides Learnership: Training programme to develop learners into wildlife officers or tour guides. The programme is operated in partnership with Ekurhuleni Municipality, BirdLife South Africa and Field Guides Association of South Africa.||R1.5 million||
We support an early childhood development programme for children with disabilities in KwaZulu-Natal, in partnership with the Department of Social Development. Centres in Ndwedwe, Umlazi, Port Shepstone and Umzumbe disability centre receive support.
We sponsor the South African National Deaf Association to promote and advocate for the rights of deaf people in South Africa.
We provide a skills development programme to uplift communities around infrastructure development projects at Cape Town International Airport, including:
|Philanthropy||Philanthropic donations||R15.2 million||
IT and digitisation
Improvements in the governance of technology commenced. More than 10 policies were updated and approved during the current year based on King IV recommended practices and the recommendations of external consultants. More than 60 technology projects were completed to strengthen governance and operational capacity in the Company.
Airports Company South Africa embarked on a R2 billion digitisation strategy to enable it to achieve its strategic objectives by leveraging technology. The strategy will create sustainable value by:
- Optimising IT capability for service delivery and innovation
- Integrating digital processes and IT capability into the governance framework and operating model
- Focusing on research, development and the governance framework and operating model innovation for efficiency improvement
- Preparing the Company’s IT architecture for a digital airports business of the future
- Sourcing strategic partners to augment our own capabilities, control IT costs and accelerate service delivery
The key focus of the strategy will be on the four digital dimensions of passenger processing, business intelligence and analytics, social and mobile technology and digital infrastructure.
Our plans and the progress we achieved in these focus areas are discussed in the following table:
|Focus areas||Achieved in 2018||Planned for 2019|
Over the past two years, we have piloted a range of digitally enabled self-service products to facilitate faster, safer and more efficient movement of passengers through our airports.
Business intelligence and analytics
Intelligent, integrated platforms provide our customers with relevant information when they need it. As we increase our adoption of digital technology and data analysis, we optimise the efficiency of decision-making and operational performance, strengthen safety and security, and respond more effectively to evolving customer needs.
To improve the efficiency of our business enablement functions, we have:
Social and mobile technology
Social and mobile platforms augment the passenger experience in airports by enabling digital access to information and improving connectivity.
The Company is developing enterprise architecture to drive and direct its IT strategy, and ensure it has the capacity to support the transition to a digital airports business.
IT sector transformation strategy
Airports Company South Africa entered into a five-year partnership with primary information and communications technology service providers to develop suppliers internally, based on a 60:40 transformation split. Tenders were issued to 30 small, medium and micro enterprise suppliers.
An IT commercial unit was established under the technical advisory and consultancy services component of our governance framework and operating model. A newly appointed group manager has been tasked with developing opportunities to commercialise IT as a means of contributing to non-aeronautical revenue. Contracts were concluded with three mobile phone businesses (MTN, Telkom and Vodacom) to secure their presence in our airports.
Further afield, the IT division generated revenue from its role in developing an IT plan and implementing digital solutions for the Kotoka International Airport expansion project in Ghana.
A partnership agreement secured with Wits University in 2017 to operate a digital technology skills development hub with research and development capacity is being implemented.
Digitisation offers significant business benefits, however, increased adoption of digital technology heightens the potential risk of cyber-crime. To manage and mitigate this risk, the Company applies appropriate safeguards and assesses these safeguards continuously to ensure the stable and secure operation of our systems. We strengthened our digital protection capacity with three new interventions:
- Mobile data encryption software was installed to protect data in the case of loss, theft or removal of devices from our Company. The software enables users to clear data remotely and prevents the transfer of data from laptop computers to external hard drives.
- Intruder detection and prevention technology was implemented to protect our systems from external threats by providing real-time data on attempted and successful hacks. Of the potential technology breaches we block monthly, only 3% involved external penetration of our systems during 2018, and they were successfully prevented. We recorded no major incidents that we were unable to prevent or mitigate.
- Top-down security training and awareness was conducted with members of the IT steering committee, the Executive Committee and airports management.
Communication and branding
Airports Company South Africa focused on embedding a new communications and branding strategy and resourcing its corporate affairs division in line with the requirements of the new governance framework and operating model. This enabled the Company to strengthen its brand management and media relations, contributing to its positioning as a world-class partner of choice.
The key communications challenge that we addressed during the year was the heightened interest in the corporate governance and procurement functioning of State-owned entities. This was demonstrated by increased scrutiny of our Company by some stakeholders, although we experienced this to a lesser degree than many other State-owned entities. Our approach to allegations against some of our executives was to respect the legal rights of individuals pending the outcome of legal and governance processes, to isolate these from our daily operations, and to communicate the measures we are implementing to address challenges in our procurement processes.
To improve the effectiveness of our response to the legitimate needs and concerns of our stakeholders, we conducted the following interventions:
- Corporate affairs conducted internal workshops to communicate the results of the 2017 RepTrak® survey, an independent stakeholder reputation assessment to assess stakeholder perception.
- Stakeholder owners identified matters relevant to their areas of operation and developed proactive stakeholder engagement plans involving key account managers to achieve desired outcomes before the next survey in 2021.
Airports Company South Africa introduced an engagement framework to encourage continuous engagement within the Company. To support this process, we made considerable progress in the digitisation of our communication platform to strengthen internal communications. Digital interventions include:
- Greater use of mobile technology to engage employees
- A company-wide WhatsApp broadcast group
- Internal advertising through a desktop messaging platform
- A live, interactive broadcast to all employees in the Company with Executive Committee members
- The introduction of on-site kiosks to enhance data gathering for the ESAT survey
Airports Company South Africa celebrated 25 years of operation in July 2018. To mark this historic milestone, plans are underway to reposition the Company’s brand locally and internationally. We will align this process with our stakeholder engagement strategy to ensure a singular approach to stakeholder engagement.
Our internal focus will be on launching a Vision 2025 communications and change campaign to ensure employee buy-in and entrench the behaviours and values required to achieve our strategic objectives.