BEGINNERS GUIDE TO SUSTAINABLE AVIATION FUELEdition 4,April 2023SAFIntroductionWhat is sustainable aviation fuel?How SAF fits into the aviation decarbonisation planThe different types of SAF:feedstocksThe different types of SAF:production pathwaysGetting it right:a commitment to sustainabilityMaking sure SAF is fit to flyThe scale-up:from trials to universal useKey challenges and the next stepsDefinitions,acknowledgements and referencesBeginners Guide to Sustainable Aviation Fuel2IntroductionWhat is sustainable aviation fuel?How SAF fits into the aviation decarbonisation planThe different types of SAF:feedstocksThe different types of SAF:production pathwaysGetting it right:a commitment to sustainabilityMaking sure SAF is fit to flyThe scale-up:from trials to universal useKey challenges and the next stepsDefinitions,acknowledgements and referencesCONTENTSINTRODUCTIONPage 4WHAT IS SUSTAINABLE AVIATION FUEL?Page 5HOW SAF FITS INTO THE AVIATION DECARBONISATION PLANPage 12THE DIFFERENT TYPES OF SAF:FEEDSTOCKSPage 15THE DIFFERENT TYPES OF SAF:PRODUCTION PATHWAYSPage 17GETTING IT RIGHT:A COMMITMENT TO SUSTAINABILITYPage 19MAKING SURE SAF IS FIT TO FLYPage 21THE SCALE-UP:FROM TRIALS TO UNIVERSAL USEPage 25KEY CHALLENGES AND THE NEXT STEPSPage 28 DEFINITIONS,ACKNOWLEDGEMENTS AND REFERENCESPage 31This publication is for information purposes only.While every effort has been made to ensure the quality and accuracy of information,it is made available without any warranty of any kind.THE IMPORTANCE OF AVIATION Aviation provides the only rapid worldwide transportation network,is indispensable for tourism and facilitates world trade.Air transport improves quality of life in countless ways.It is a major global employer and contributor to global economic prosperity.Air transport moves around 4.5 billion passengers annually and 61 million tonnes of freight1.The air transport industry generates a total of 87.7 million jobs globally2.Air transport is necessary for transporting high value,time-sensitive goods:35%of world trade by value and less than 1%by volume3.58%of international tourists travel to their destination by air4.Aviations global economic impact is estimated at$3.5 trillion(including direct,indirect,induced and tourism catalytic)5.If the aviation industry were a country,it would rank 17th in the world in terms of GDP6.Aviation is one of the few sectors in the world to have an industry and UN-backed goal of net-zero carbon by 2050(aviationbenefits.org/flynetzero/)and roadmaps in place to show how it can work.The global aviation industry produces around 2%of all human-induced carbon dioxide (CO2)emissions7.A typical new generation single-aisle aircraft emits around 50 grams of CO2 per seat kilometre.This is equivalent to 2 litres of fuel burned per passenger for 100 km and comparable to the efficiency of compact cars8.Beginners Guide to Sustainable Aviation Fuel3IntroductionWhat is sustainable aviation fuel?The different types of SAF:feedstocksThe different types of SAF:production pathwaysGetting it right:a commitment to sustainabilityMaking sure SAF is fit to flyThe scale-up:from trials to universal useKey challenges and the next stepsDefinitions,acknowledgements and referencesHow SAF fits into the aviation decarbonisation planBeginners Guide to Sustainable Aviation Fuel4What is sustainable aviation fuel?How SAF fits into the aviation decarbonisation planThe different types of SAF:feedstocksThe different types of SAF:production pathwaysGetting it right:a commitment to sustainabilityMaking sure SAF is fit to flyThe scale-up:from trials to universal useKey challenges and the next stepsDefinitions,acknowledgements and referencesIntroductionINTRODUCTIONEfficiency has always been a tremendous driver of progress in aviation and has made air travel and mobility central to modern life.Indeed,today,our engines are at the cutting edge of efficiency and our aircraft are more aerodynamic and lighter than ever before.We are making improvements in air traffic control efficiency,how we fly our aircraft and in developing less environmentally-impacting operations at airports.But we are still,for the vast majority of flights,using the same fuel.That is now changing.Aviations drive for fuel and operational efficiency has helped the industry limit its emissions.To go even further,the aviation industry has embarked on a journey that will lead us to net-zero carbon emissions by 2050.Sustainable aviation fuel(SAF)has a crucial role to play in providing a cleaner source of energy to power the worlds fleet of aircraft and help the billions of people who travel by air each year to lower the impact of their journeys.The industrys Waypoint 2050 analysis suggests that SAF will contribute between 53 and 71%of the emissions reductions needed to get to net-zero by 2050.This guide looks at the opportunities and challenges in developing sustainable aviation fuel for the commercial aviation sector and the measures that will be required for the aviation industry to scale up production with assistance from governments.To learn more about the other aircraft technologies and operational and infrastructure improvements underway across the aviation industry,see www.aviationbenefits.org.Achieving net-zero carbon emissions by 2050In October 2021,the commercial aviation industry adopted a long-term climate goal,net-zero carbon for air transport by 2050,confirming the commitment of the worlds airlines,airports,aircraft operators,air traffic management companies and the makers of aircraft and engines to reduce CO2 emissions in support of the Paris Agreement.It will be a significant challenge to meet net-zero carbon emissions by 2050,but the evidence shows that with the right support from governments and efforts across the value chain,especially within the energy industry,it is achievable.A year later,in October 2022,governments meeting at the ICAO Assembly in Montreal adopted a long-term aspirational goal of net-zero carbon emissions for international flights by 2050,one of the only global sector-specific climate goals.A mix of new technology including innovative new propulsion technologies that could be powered by electricity and hydrogen,improvements in operations and infrastructure will play their roles in reducing carbon emissions,but a transition to sustainable aviation fuel will be crucial to successfully achieving net-zero carbon for the aviation sector.Beginners Guide to Sustainable Aviation Fuel5IntroductionHow SAF fits into the aviation decarbonisation planThe different types of SAF:feedstocksThe different types of SAF:production pathwaysGetting it right:a commitment to sustainabilityMaking sure SAF is fit to flyThe scale-up:from trials to universal useKey challenges and the next stepsDefinitions,acknowledgements and referencesWhat is sustainable aviation fuel?WHAT IS SUSTAINABLE AVIATION FUEL?There are a number of terms used to describe non-fossil based hydrocarbon fuel.Often,the term biofuel is used.The aviation industry avoids this terminology as it does not specify the sustainability aspect of these fuels.Some biofuels,if produced from non-sustainable feedstocks,such as unsustainably-sourced oils or crops that lead to deforestation,can cause additional environmental damage,making them unsuitable for aviations purposes.Sustainable aviation fuel,or SAF,is a safe replacement for conventional(fossil-based)fuel that could reduce carbon emissions.It is almost chemically identical to traditional jet fuel.It is generated from feedstocks that absorb carbon dioxide(CO2)and provide a net reduction in CO2 emissions when compared to fossil fuels.Today,SAF is blended with conventional kerosene in ratios of up to 50%SAF to ensure compatibility with aircraft,engines or fuelling systems.Commercial flights are currently permitted to fly with a blend of SAF and conventional fossil-based kerosene.The industry is working towards commercial aircraft being permitted to fly with 100%SAF in the near future.SAF can be produced from a variety of feedstocks and through several processes,which will be explored in this guide.Importantly,the aviation industry has committed to ensuring that sustainability is the highest priority for the development of this new energy source.Other terms such as biofuel,renewable aviation fuel,renewable jet fuel,alternative fuel,and biojet fuel have similar intended meanings to SAF.The description of SAF comprises three key principles:1.Sustainability in this context is defined as low-carbon raw material that can be continually and repeatedly resourced in a manner consistent with economic,social and environmental aims,specifically something that conserves an ecological balance by avoiding depletion of natural resources,does not compete with other requirements such as food,land and water use;and mitigates the aviation sectors contribution to climate change.2.It is an alternative to traditional energy sources for aviation,in this case non-conventional or advanced fuels,and includes any materials or substances that can be used as fuels,other than conventional,fossil sources(such as oil,coal,and natural gas).It is also processed to create jet fuel in an alternative manner.Feedstocks for SAF are varied;ranging from cooking oil,plant oils,municipal waste,waste gases,agricultural residues,green hydrogen and even electricity to name a few.Further information about this can be found on pages 15 and 16.It is important to note that not all“alternative”fuels are“sustainable”.3.Aviation fuel refers to drop-in fuel that meets the technical requirements for use in commercial aircraft and can be used in existing technology and fuel systems,ensuring the most important aspect of aviation operations safety is maintained.The International Civil Aviation Organization(ICAO),a United Nations specialised agency,defines SAF as a renewable or waste-derived aviation fuel that meets the ICAO Carbon Offsetting and Reduction Scheme for International Aviation(CORSIA)sustainability criteria.Sustainable aviation fuel providing environmental benefitsRelative to fossil fuels,SAF results in a reduction in carbon dioxide(CO2)emissions across the entire lifecycle of the fuel.This includes the Beginners Guide to Sustainable Aviation Fuel6IntroductionHow SAF fits into the aviation decarbonisation planThe different types of SAF:feedstocksThe different types of SAF:production pathwaysGetting it right:a commitment to sustainabilityMaking sure SAF is fit to flyThe scale-up:from trials to universal useKey challenges and the next stepsDefinitions,acknowledgements and referencesRelative to fossil fuels,SAF results in a reduction in carbon dioxide emissions across its lifecycle.CO2 required to grow or produce the material being used to generate the fuel,the CO2 required to capture,transport,and refine the material,and the CO2 emitted when the fuel is burned.As a point of reference,CO2 absorbed by plants during their growth,or captured from industrial sources is roughly equivalent to the amount of CO2 produced when fuel is burned in an engine,which is returned to the atmosphere.When all CO2 elements are accounted for in the lifecycle of SAF,analysis shows the fuel provides significant reductions in overall CO2 emissions when compared to fossil fuels.In the coming years,lifecycle CO2 reductions across the different sources of SAF will average around 70-80%,but enhancements in the production process and the use of other instruments such as carbon capture could see this average increase to 100%CO2 reduction or possibly even higher.The lower the emissions are from SAF transportation,and from the conversion of feedstocks into jet fuel,the closer the SAF will be to carbon-neutrality.Furthermore,some forms of SAF contain fewer impurities(such as sulphur and aromatic hydrocarbons),which results in reductions of soot,sulphur dioxide and particulate matter emissions.Some studies have shown that SAF could also reduce the incidence of contrail formation and therefore may deliver other climate benefits.In the case of SAF produced from municipal waste,for example,the environmental gains are derived both from avoiding fossil fuel use and from the fact that the waste would otherwise be either burned in the open air or incinerators,or left to decompose in landfill sites producing gases such as methane.Instead,the SAF generated from this waste is used to power a commercial flight.Fuel is typically the single largest operating cost for the airline industry.The fluctuating price of crude oil makes it very difficult for airlines and operators to plan and budget for long-term operating expenses.SAF when it becomes widely available,can be produced across the world using a wide variety of feedstocks,potentially reducing aircraft operators exposure to the fuel cost volatility that comes with having a single fossil-based energy source,when it will be available at scale.What is sustainable aviation fuel?OILEXTRACTIONCO2TRANSPORTCO2REFININGCO2DISTRIBUTIONAT AIRPORTSFLIGHTTRANSPORTCO2CO2STORAGEAt each stage in the distribution chain,carbon dioxide is emitted through energy use by extraction,transport,etc.CARBON LIFECYCLE:FOSSIL FUELSBeginners Guide to Sustainable Aviation Fuel7IntroductionHow SAF fits into the aviation decarbonisation planThe different types of SAF:feedstocksThe different types of SAF:production pathwaysGetting it right:a commitment to sustainabilityMaking sure SAF is fit to flyThe scale-up:from trials to universal useKey challenges and the next stepsDefinitions,acknowledgements and referencesCARBON LIFECYCLE:SAF PRODUCTION FROM WASTE AND OTHER BIOMASS SOURCESREFININGTO FUELCO2DISTRIBUTIONAT AIRPORTSWASTE BIOMASSSOURCES(Including avoided methaneemissions from landfill)CO2TRANSPORTTRANSPORTCO2STORAGE ANDBLENDING(of SAF and fossil jet fuel)SORTING ANDPRE-PROCESSING(Municipal waste sortingincludes removingrecyclables)CO2FLIGHTCO2SUSTAINABLEBIOMASSSOURCESTRANSPORTCarbon dioxide will be reabsorbed as the next generation of feedstock is grown.What is sustainable aviation fuel?Beginners Guide to Sustainable Aviation Fuel8IntroductionHow SAF fits into the aviation decarbonisation planThe different types of SAF:feedstocksThe different types of SAF:production pathwaysGetting it right:a commitment to sustainabilityMaking sure SAF is fit to flyThe scale-up:from trials to universal useKey challenges and the next stepsDefinitions,acknowledgements and referencesDISTRIBUTIONAT AIRPORTSFLIGHTRENEWABLEENERGYCONVERSION OFCO2 TO CARBONMONOXIDEELECTROLYSISOF WATER TOGENERATE HYDROGENO2H2CO2H2SYNGASCO2 CAPTURE(from power stationor direct air capture)REFINE SYNGASTO LIQUID FUELCO2TRANSPORTCO2CO2TRANSPORTREFINERY STORAGEAND BLENDING(of SAF and fossil jet fuel)CARBON LIFECYCLE:SAF PRODUCTION FROM THE POWER-TO-LIQUID(PtL)PROCESSWhat is sustainable aviation fuel?Beginners Guide to Sustainable Aviation Fuel9IntroductionHow SAF fits into the aviation decarbonisation planThe different types of SAF:feedstocksThe different types of SAF:production pathwaysGetting it right:a commitment to sustainabilityMaking sure SAF is fit to flyThe scale-up:from trials to universal useKey challenges and the next stepsDefinitions,acknowledgements and referencesCARBON LIFECYCLE:SAF PRODUCTION FROM THE WASTE INDUSTRIAL GAS PROCESSCO2DISTRIBUTION AT AIRPORTSSTORAGE ANDBLENDING(of SAF and fossil jet fuel)TRANSPORTCO2REFININGTO FUELCO2FLIGHTCO2Capturing waste gases fromindustrial facilities andconverting to a liquid fuelTRANSPORTTRANSPORTCOCO2H2Emissions of CO2 or equivalent gases are avoided and instead recycled.What is sustainable aviation fuel?Beginners Guide to Sustainable Aviation Fuel10IntroductionHow SAF fits into the aviation decarbonisation planThe different types of SAF:feedstocksThe different types of SAF:production pathwaysGetting it right:a commitment to sustainabilityMaking sure SAF is fit to flyThe scale-up:from trials to universal useKey challenges and the next stepsDefinitions,acknowledgements and referencesTo avoid these negative environmental impacts,the aviation industry has been careful to promote only those fuels that can be demonstrated to meet strong sustainability requirements and standards.This is why the industry uses the term sustainable aviation fuel,which has also sometimes been referred to as next generation or advanced biofuels.Additionally,some of the feedstocks used to create SAF are not strictly biological in nature(such as municipal waste,direct air capture CO2 or point source industrial CO2),rendering the word biofuel inaccurate.An ideal“drop-in”fuelThe chemical and physical characteristics of SAF are almost identical to those of conventional jet fuel(Jet A-1).SAF can be mixed with conventional jet fuel and,once blended is certified to exactly the same standard as conventional jet fuel.This allows use of the same supply infrastructure and does not require the adaptation of aircraft or engines.Fuels with these properties are called“drop-in fuels”(i.e.fuels that can be directly incorporated into existing airport fuelling systems and on board aircraft).As always in aviation,safety is the key driver.“Lower carbon aviation fuels”Lower carbon aviation fuel(LCAF)is a fossil aviation fuel that can contribute towards emission reduction obligations under the international CORSIA scheme.To comply,it must demonstrate a lifecycle improvement of at least 10%relative to the average global fossil fuel carbon intensity.While not common,it is theoretically possible to achieve this,thanks to lower carbon intensity crude oil,improving extraction methods and reducing flaring of gases.Without incorporating CO2 capture and storage into the LCAF lifecycle,benefits are unlikely to be substantially more than 10%compared with conventionally-produced fuel,implying that LCAF is not a long-term decarbonisation solution(and should not be considered as SAF).However,while conventional fossil fuel is still used in the aviation system,all improvement opportunities should be utilised.What is sustainable aviation fuel?Sustainable aviation fuel providing economic and social benefitsFor many developing countries,SAF represents a significant economic and employment opportunity the shift to SAF could result in up to 14 million jobs being created or transferred from fossil fuel energy jobs.SAF can also provide economic benefits to parts of the world that have large amounts of land that qualifies as marginal,abandoned or unviable for growing food,but is suitable for growing energy crops,or that have sources of feedstock(such as waste)that are not used for any other purpose.Many of these countries are developing nations that could benefit greatly from a new industry such as SAF production with the added benefit that it does not negatively impact their local food production and in some cases could actually strengthen the agricultural sector and improve food security for the region.In many parts of the world,decomposing waste is a serious environmental problem.SAF can also be produced from waste materials such as municipal solid waste(including household food waste and waste cooking oils).Why SAF and not biofuel?When biofuels first came onto the market,they were initially produced and aimed at substituting fossil fuels in the road transport sector.These are sometimes termed first-generation biofuels.The main types of biofuels used for automobiles are biodiesel and bioethanol.They are derived from crops such as sugarcane,corn grain,palm oil,rapeseed,and soybean oil which typically can also be used as food for humans and animals.Consequently,the unsustainable production of this type of biofuel can raise a number of concerns,including potential changes in the use of agricultural land,water use,the possible effect on food prices;and the impact of irrigation,pesticides and fertilisers on local environments.While these feedstocks could be used to create jet fuel through different processes,the aviation industry has been keen to avoid using them when they present sustainability risks.However,some forms of corn,for example,are not human food grade and can provide benefits that help with energy provision as well as feed for livestock.Beginners Guide to Sustainable Aviation Fuel11IntroductionHow SAF fits into the aviation decarbonisation planThe different types of SAF:feedstocksThe different types of SAF:production pathwaysGetting it right:a commitment to sustainabilityMaking sure SAF is fit to flyThe scale-up:from trials to universal useKey challenges and the next stepsDefinitions,acknowledgements and referencesAIRCRAFTTANKTRANSPORTTRANSPORTREFININGDISTRIBUTIONAT AIRPORTSEXTRACTION from a well(fossil fuel),or production of SAF feedstockAIRCRAFTIN FLIGHT(the wake)WELL-TO-TANKTANK-TO-WAKEWELL-TO-WAKECO2 reduction accounting There are two main ways of accounting for the CO2 reductions of the use of an alternative fuel.Well-to-wake emissions are representative of a fuels carbon emission output across its entire value chain,including the emissions associated with feedstock sourcing(or oil extraction),processing,transportation,distribution and deployment.Tank-to-wake refers simply to the CO2 produced when the fuel is burnt in flight.What is sustainable aviation fuel?Beginners Guide to Sustainable Aviation Fuel12IntroductionWhat is sustainable aviation fuel?The different types of SAF:feedstocksThe different types of SAF:production pathwaysGetting it right:a commitment to sustainabilityMaking sure SAF is fit to flyThe scale-up:from trials to universal useKey challenges and the next stepsDefinitions,acknowledgements and referencesHow SAF fits into the aviation decarbonisation plan11 1,0002,0003,0004,0005,000CO(millions of tonnes)19902000201020202030204020500 RequiredemissionsreductionsEmissions reductions already achieved:over 11 Gt of CO avoided throughinvestment in technology and operationalimprovements since 1990Carbon-neutral growth5,200 Mt2050 emissions without additional efforts:2,000 MtNet-zeroCO2 emissions TECHNOLOGYOPERATIONS AND INFRASTRUCTURE IMPROVEMENTSSAFOUT-OF-SECTORMARKET MECHANISMSHOW SAF FITS INTO THE AVIATION DECARBONISATION PLANIn 2021,the aviation industry established a challenging goal to achieve net-zero carbon emissions by 2050(aviationbenefits.org/flynetzero/).There were 46.8 million scheduled commercial flights9 carrying 4.5 billion passengers in 2019,which generated roughly 2%of global human-induced carbon emissions equivalent to 914 million tonnes of CO210.Aviations passenger numbers are expected to grow to up to 7.2 billion by 2035,meaning that effective action on reducing carbon emissions is essential to ensure the sustainable development of the industry.SAF produces considerable reductions in CO2 over its lifecycle,compared to fossil jet fuel an average of 70%to 80%today,but this can vary.Beginners Guide to Sustainable Aviation Fuel13IntroductionWhat is sustainable aviation fuel?The different types of SAF:feedstocksThe different types of SAF:production pathwaysGetting it right:a commitment to sustainabilityMaking sure SAF is fit to flyThe scale-up:from trials to universal useKey challenges and the next stepsDefinitions,acknowledgements and referencesCompanies across this sector are collaborating to reduce emissions through a four-pillar strategy of new technology,operations and infrastructure improvements,SAF and out-of-sector market mechanisms to fill the remaining emissions gap.Using SAF provides the aviation industry with an alternative energy source,enables the industry to reduce its carbon footprint by reducing its dependence on fossil-based fuel sources and allows it to draw upon a variety of different energy providers.SAF will play a key role in achieving the industrys goal of net-zero carbon emissions by 2050.Key advantages of SAF Environmental benefits:sustainably produced alternative jet fuel can considerably reduce(by 70%-80%today)emissions across their lifecycle,compared to conventional fossil jet fuel,but with 100%possible in the future.Additional environmental benefits include the diversion of waste from landfills or discharge into the environment.Diversified supply:SAF offers a viable alternative to conventional fossil kerosene and can allow for a more diverse geographical supply through sustainable sources and low-carbon energy.Economic and social benefits:SAF can generate economic benefits to all regions of the world,but especially developing nations,that have non-productive land for food crops which can be suitable for producing SAF feedstock.Refining infrastructure is likely to be installed close to feedstock sources,generating additional jobs and economic activity.A drop-in alternative:SAF can use existing fuel supply and distribution infrastructure,ensuring an energy transition can take place faster than other options which would require a wholesale change in the equipment we use.Aviation efficiency technology will only take us so farThe progress the aviation industry has made in reducing its impact on the environment is significant and has become one of the industrys central motivations.The aerodynamics of aircraft,the performance and efficiency of modern engines and the operational improvements by airlines,airports and air traffic systems have all combined to make aircraft over 80%more fuel-efficient since the introduction of modern jet engines in the 1950s.The industry will continue to make technology improvements in the way aircraft are manufactured and how they are flown,with some significant improvements already in place.But while cutting-edge technology means the most modern aircraft are now more fuel-efficient than many cars per passenger-kilometre,the forecast growth in the number of people flying will see the industrys emissions continue to rise unless other means to reduce emissions are found.Continual improvement in aircraft efficiency is still a key industry objective,and is especially important in order to minimise the demand for liquid fuels.Hydrocarbon liquid fuel is the only option for aviation for nowAt this stage,the only option to power the existing fleet of large commercial aircraft sustainably in the coming decades is by gradually switching from fossil fuel to SAF.Encouraging progress has been made in recent years in the development of electric aircraft,with a number of small-scale prototypes having already been flown.It is expected that in a few decades,short-range,small,electric-powered commercial aircraft will be safe,certifiable and commercially feasible.Hydrogen can also be burned in a turbine engine for aviation and there is significant progress being made on the technology that may allow this to happen.If the technology matures,short-range hydrogen-powered aircraft could enter service from around 2035 onwards.However,the majority of emissions come from flights on larger aircraft where both electric and hydrogen would not be viable until well into the middle of the century.There are 30,000 aircraft in todays fleet that can use SAF already.Many of these valuable assets will not be retired for a long time,another reason SAF remains the most important How SAF fits into the aviation decarbonisation planBeginners Guide to Sustainable Aviation Fuel14IntroductionWhat is sustainable aviation fuel?The different types of SAF:feedstocksThe different types of SAF:production pathwaysGetting it right:a commitment to sustainabilityMaking sure SAF is fit to flyThe scale-up:from trials to universal useKey challenges and the next stepsDefinitions,acknowledgements and referencesenergy shift for aviation in the medium and potentially long-term.While SAF might not be the only long-term solution to decarbonising aviation,it is undeniably the best solution for action right now,alongside fleet renewal.Hydrogen will be a significant energy source for aviationDespite a lot of work being needed to develop hydrogen-fuelled aircraft and associated infrastructure to support them,green hydrogen still has an important role to play as feedstock for SAFs known as power-to-liquid(PtL)fuels(see page 15).It is therefore vital that as governments and the energy sector develop national hydrogen strategies,aviation is also considered a key user of the product.Providing diversified supplyThe aviation industrys reliance on conventional fossil fuels means that it is affected by a range of fluctuations,such as the changing price of crude oil and problems with supply and demand.SAF is an attractive alternative as its feedstocks are not limited to locations where fossil fuels can be extracted and refined.As SAF supply develops and scales,this should provide a more diverse geographic supply and potentially energy security for countries that today are net jet fuel importers.Opportunities will exist for existing oil and gas infrastructure to be repurposed such that they become compatible to process new feedstocks applicable to SAF production.Modern aircraft are over 80%more fuel-efficient than those flown at the start of the jet age in the 1950s.How SAF fits into the aviation decarbonisation planBeginners Guide to Sustainable Aviation Fuel15IntroductionWhat is sustainable aviation fuel?How SAF fits into the aviation decarbonisation planThe different types of SAF:production pathwaysGetting it right:a commitment to sustainabilityMaking sure SAF is fit to flyThe scale-up:from trials to universal useKey challenges and the next stepsDefinitions,acknowledgements and referencesThe different types of SAF:feedstocksTHE DIFFERENT TYPES OF SAF:FEEDSTOCKSCurrent technology allows sustainable aviation fuel to be produced from a wide range of feedstocks,including:Waste oils and fats:this typically comes from plant or animal fats and greases that have been used for cooking and are no longer usable for further cooking(used cooking oil),or as waste from food production(such as tallow).This is currently the most widely used feedstock for SAF production,but supply is not endless and even though it will continue to play a role in SAF,other sources will grow to form a larger portion of the market.Municipal solid waste:carbon-based waste that comes from households and businesses.Some examples include:product packaging,grass clippings,furniture,clothing,bottles,food scraps and newspapers.There is great potential to use municipal solid waste as a sustainable feedstock,due to its vast supply.Rather than simply dumping municipal waste in a landfill site,where it will emit methane and other gases into the atmosphere,it can be used to create jet fuel instead.Cellulosic waste:this comes from excess wood,agricultural waste(such as corn stalks),and forestry residues(branches and leaves that are not tradeable).These residues can be processed into synthetic fuel through proven chemical reactions(i.e.,the Fischer-Tropsch pathway)or converted into renewable isobutanol or ethanol and,further,into jet fuel through the“alcohol-to-jet”(AtJ)pathway.Other pathways are also under development.Cover crops such as camelina,carinata,and pennycress:cover or rotational oil seed crops that are grown in rotation with wheat and other cereal crops within the same year,when the land would otherwise be left fallow(unplanted)as part of the normal crop rotation programme.This provides growers with an opportunity to diversify their crop base and reduce mono-cropping(planting the same crop year after year),which has been shown to degrade soil and reduce yields and resistance to pests and diseases.With camelina,the leftover meal from the oil extraction can also be used as animal feed in small proportions.Carinata is a non-edible oilseed crop with similar promise.Non-biogenic alternative fuels:these include power-to-liquid(see page 8),which typically involves creating jet fuel from carbon sources such as industrial point source waste gases or,in the future,direct air captured carbon,combined with green hydrogen produced using renewable energy powered electrolysers.Alternatively,industrial waste gases can be converted into ethanol using biological conversion processes,and the ethanol subsequently converted into jet fuel.While direct power-to-liquid options are based on technically proven steps,the process is currently expensive and needs further technological and commercial development.Other more advanced technologies are in early stages of development,such as solar jet fuel(or sun-to-liquid),which use highly concentrated sunlight to break up water and CO2 molecules.Because these processes are not relying on waste resources or non-food crops,there is theoretically an unlimited supply available and this will likely make up a large proportion of SAF production in the future.Jatropha:a plant that produces seeds containing inedible lipid oil that can be used to produce fuel.Each seed produces 30 to 40%of its mass in oil.Jatropha can be grown in a range of difficult The aviation industry has been careful to promote only sustainably-sourced alternative fuel,so as to avoid negative environmental impacts.Beginners Guide to Sustainable Aviation Fuel16IntroductionWhat is sustainable aviation fuel?How SAF fits into the aviation decarbonisation planThe different types of SAF:production pathwaysGetting it right:a commitment to sustainabilityMaking sure SAF is fit to flyThe scale-up:from trials to universal useKey challenges and the next stepsDefinitions,acknowledgements and referencessoil conditions,including arid and otherwise non-arable areas,leaving prime land available for food crops.The seeds are toxic to both humans and animals and are,therefore,not a food source.Crop yield in some conditions requires improvement for jatropha to be commercially viable.Halophytes:salt marsh grasses and other saline habitat species that can grow either in salt water or in areas affected by sea spray where plants would not normally be able to grow.They provide biomass for fuels through the production of oil seeds or their lignocellulosic biomass.A demonstration project developed in the UAE showed the potential of growing halophytes integrated with seawater aquaculture,such that an integrated system could produce both food(i.e.fish from aquaculture)and feedstock for fuels.Algae:these are microscopic plants that can be grown in plastic sleeves(micro algae)or polluted or salt water,deserts and other inhospitable places(macro algae).They thrive off CO2,which makes them ideal for carbon sequestration(absorbing CO2)from sources like power plants.One of the biggest advantages of algae for SAF production is the speed at which the feedstock can grow.It has been estimated that algae produces up to 15 times more oil per square kilometre than other equivalent feedstock.Algae are well suited to be grown on marginal land unsuitable for growing food.Algae has yet to fulfil its early promise due to commercialisation challenges,however,continued research and development may result in wider application of this feedstock in the future.The different types of SAF:feedstocksBeginners Guide to Sustainable Aviation Fuel17IntroductionWhat is sustainable aviation fuel?How SAF fits into the aviation decarbonisation planThe different types of SAF:feedstocksGetting it right:a commitment to sustainabilityMaking sure SAF is fit to flyThe scale-up:from trials to universal useKey challenges and the next stepsDefinitions,acknowledgements and referencesThe different types of SAF:production pathwaysTHE DIFFERENT TYPES OF SAF:PRODUCTION PATHWAYSThere are currently seven SAF production pathways approved by ASTM International12 with each pathway representing different processes for production depending on the type of feedstocks.A number of other pathways are also going through the rigorous assessment process for their viability for use in aviation.Each pathway has potential benefits such as feedstock availability and cost,total carbon reduction,or processing complexity and cost.Some SAF pathways may be more suitable than others in certain areas of the world depending on feedstock availability and processing capabilities.All pathways,however,have the potential to enable the aviation sector to reduce its carbon footprint significantly,assuming all sustainability criteria are met.Thousands of commercial flights have now been operated using SAF.While blend limits exist today for technical and safety reasons,this is not seen as an impediment to SAF development.SAF production is in the early stages and is not likely to be limited by technical blend limitations indefinitely.The major airframe and engine manufacturers are working to ensure that all aircraft can safely operate on 100%SAF by 2030.The continued testing and development of new processes and feedstocks will yield useful data to support revision of the specification to allow more flexibility in the supply chain,as well as potential benefits in terms of fuel price stability and availability.An additional method to accelerate SAF production is co-processing which involves the use of sustainable feedstock as a small percentage of input into the refining of conventional fossil-based jet fuel.This process enables major fuel producers to incorporate sustainable feedstocks into their existing production processes and facilities,which represents a significant opportunity to scale up SAF production through current infrastructure,while dedicated facilities scale-up.ASTM currently limits co-processed SAF to 5%by volume of conventional fossil-based jet fuel in two specific pathways(see table on page 18),though there are plans to re-evaluate these limits in 2023.It should be noted that fuels produced using these feedstocks can be both sustainable and unsustainable,depending on the methods used to produce the feedstocks and the process used to create the fuel.This is why the commercial aviation industry is careful to follow strict,independently-verified sustainability standards,including those developed by governments,industry and environmental groups at the United Nations.Beginners Guide to Sustainable Aviation Fuel18IntroductionWhat is sustainable aviation fuel?How SAF fits into the aviation decarbonisation planThe different types of SAF:feedstocksGetting it right:a commitment to sustainabilityMaking sure SAF is fit to flyThe scale-up:from trials to universal useKey challenges and the next stepsDefinitions,acknowledgements and referencesPathwayFeedstock Certification Name&Blend LimitFischer-Tropsch Energy crops,lignocellulosic biomass,solid wasteFT-SPK(up to 50%)Hydroprocessed Esters and Fatty Acids(HEFA)Waste fats,oils,greases(FOGs)from vegetable and animal sources HEFA-SPK(up to 50%)Direct Sugars to Hydrocarbons(DSHC)Conventional sugars,lignocellulosic sugars HFS-SIP(up to 10%)Fischer-Tropsch with Aromatics Energy crops,lignocellulosic biomass,solid wasteFT-SPK A(up to 50%)Alcohol to Jet(AtJ)Sugar,starch crops,lignocellulosic biomassATJ-SPK(up to 50%)Catalytic Hydrothermolysis Jet(CHJ)Waste fats,oils,greases(FOGs)from vegetable and animal sourcesCHJ or CH-SK(up to 50%)HEFA from Algae Micro-algae oils HC-HEFA-SPK(up to 10%)FOG Co-Processing*Waste fats,oils,greases(FOGs)from vegetable and animal sourcesFOG-CP(up to 5%)FT Co-Processing*Fischer-Tropsch biocrudeFT-CP(up to 5%)The different types of SAF:production pathwaysSAF PRODUCTION PATHWAYS*Co-processing pathwaysBeginners Guide to Sustainable Aviation Fuel19IntroductionWhat is sustainable aviation fuel?How SAF fits into the aviation decarbonisation planThe different types of SAF:feedstocksThe different types of SAF:production pathwaysMaking sure SAF is fit to flyThe scale-up:from trials to universal useKey challenges and the next stepsDefinitions,acknowledgements and referencesGetting it right:a commitment to sustainabilityGETTING IT RIGHT:A COMMITMENT TO SUSTAINABILITYThe commitment by the commercial aviation industry to achieve net-zero carbon emissions by 2050 is its main motivation to use SAF as a means to meet the aviation industrys ambitious net-zero climate goal.However,simply deploying any form of alternative fuel on aircraft does not necessarily reduce overall carbon emissions.The fuels used must demonstrate a net carbon reduction through the full life cycle of the fuel,as described on pages 5-11,as well as other sustainability criteria in order to be deemed sustainable aviation fuel.Sustainability certification standards have been developed for SAF by two independent,non-governmental organisations known as the Roundtable on Sustainable Biomaterials(RSB)and the International Sustainability and Carbon Certification(ISCC)organisations.RSB and ISCC pay particular attention to a number of sustainability principles,including:Lifecycle greenhouse gas emissions Direct and induced land use change Water supplies High conservation value area and biodiversity Socio-economic conditions of farmers and local population(particularly in developing countries)Improving food security in food insecure regions.In addition to RSB and ISCC,individual governments establish sustainability requirements under various incentive programmes such as the US Renewable Fuel Standard and the EU Renewable Energy Directive.As part of the government,environment group and industry process to develop the ICAO Carbon Offsetting and Reduction Scheme for International Aviation(CORSIA),a set of sustainability criteria have been adopted.This framework provides a common set of international standards to ensure all SAF meets the criteria needed to be considered truly sustainable.In some countries,particularly in the US and EU Member States,governments offer financial incentives for alternative fuel that meets sustainability criteria;and a document confirming sustainability is one of the pre-requisites to demonstrate eligibility.Moreover,in the US,France and the Netherlands(with more EU States potentially to follow)deployment of alternative fuel can contribute towards the overall targets for renewable transport fuels.In the US,a coalition of airlines,manufacturers,energy producers and US government agencies joined together to form the Commercial Aviation Alternative Fuels Initiative(CAAFI)13,which aims to facilitate the commercial deployment of SAF,making it economically viable and environmentally sound.Joint initiatives in other countries such as the UKs Jet Zero Council are adopting similar collaborative approaches.On the production side,governments large-scale incentives are vital to expand the use of SAF and fulfil aviations net-zero commitment by 2050.The US in particular has introduced significant assistance for the development of SAF production with a Grand Challenge being promoted by the White House to incentivise the shift to between 10%and 15%of US jet fuel in 2030(or around 9 million tonnes/11 billion litres),along with tax incentives recently introduced under the Inflation Reduction Act of 2022.Other countries such as those in Europe are seeking to introduce mandates on the use of SAF,including the ReFuel EU process which has set a 2030 goal on SAF use.The development of SAF will support a number of the UN Sustainable Development Goals.Beginners Guide to Sustainable Aviation Fuel20IntroductionWhat is sustainable aviation fuel?How SAF fits into the aviation decarbonisation planThe different types of SAF:feedstocksThe different types of SAF:production pathwaysMaking sure SAF is fit to flyThe scale-up:from trials to universal useKey challenges and the next stepsDefinitions,acknowledgements and referencesSAF and the UN Sustainable Development GoalsIn 2015,the United Nations announced the 2030 Agenda for Sustainable Development.Underpinning the Agenda is a set of 17 Sustainable Development Goals(SDGs),which are intended to address the root causes of poverty and drive development globally.Aviation,in general,supports many of the aims of the goals14.The increasing production of SAF will help to work towards SDG 7(Affordable and clean energy)and SDG 13(Climate action).Through the diversification of feedstock supply,the commercialisation of SAF can also help support some of the more socially and economic-focused SDGs(such as No poverty and Reduced inequalities),by providing employment opportunities in developing countries.As the production of SAF is scaled up,the industry will also be focusing on avoiding negative impacts on SDG 6(Clean water and sanitation)and SDG 15(Life on land).For more information see www.aviationbenefits.org/SDGsGetting it right:a commitment to sustainabilityBeginners Guide to Sustainable Aviation Fuel21IntroductionWhat is sustainable aviation fuel?How SAF fits into the aviation decarbonisation planThe different types of SAF:feedstocksThe different types of SAF:production pathwaysGetting it right:a commitment to sustainabilityThe scale-up:from trials to universal useKey challenges and the next stepsDefinitions,acknowledgements and referencesMaking sure SAF is fit to flyRE-CERTIFIED=JET FUELCOMPLIANTCONVENTIONAL JET FUEL IS BLENDED WITH SAF AND APPROVED FOR TECHNICAL COMPLIANCEFOSSIL JETFUELSAFBLENDINGTANKRE-CERTIFIED=JET FUELCOMPLIANTMAKING SURE SAF IS FIT TO FLYSAF undergoes strict laboratory,ground,and flight tests under an internationally-recognised standard.Aviation is well-known for its exacting safety standards and the fuel we use is no exception.For it to substitute conventional jet fuel,SAF must have the same qualities and characteristics as jet fuel.This ensures that manufacturers do not have to redesign engines or aircraft and also ensures that fuel suppliers and airports do not have to build new fuel delivery systems.At present,the commercial aviation industrys focus is to use SAF as a“drop-in”replacement to conventional jet fuel.SAF is currently combined with the petroleum-based fuels as a blend,but test flights using 100%SAF have taken place.To ensure technical and safety compliance,SAF must undergo strict laboratory,ground,and flight tests under an internationally-recognised standard,which is led by ASTM international,a collective organisation bringing together hundreds of researchers,technical experts and scientists to determine the technical requirements to ensure fuel safety.Safety is the aviation industrys top priority.Given this and the specific requirements for any fuels used in aircraft,the process for testing potential new fuels is particularly rigorous.Through testing in laboratories,in equipment on the ground and under the extreme conditions of in-flight operations,an exhaustive process is used to evaluate and qualify the suitability of each type of SAF before it is deployed.In the laboratoryIn the lab,researchers develop processes to produce SAF that has properties comparable to conventional jet fuel.This is especially important because fuel is used for many purposes inside the aircraft and engine,including as a lubricant,cooling fluid and hydraulic fluid,as well as for combustion that powers the aircraft.On the groundRigorous tests assess specific fuel consumption at several power settings,ranging from ground idle to take-off speed,which is then compared to performance with conventional jet fuel.Assessments are made on the time it takes for the engine to start,how well the fuel stays ignited in the engine and how the fuel performs in acceleration and deceleration.Tests ensure that the fuels dont have a negative impact on the materials used in building aircraft and components.Finally,an emissions test determines the exhaust emissions and smoke levels for the SAF.Beginners Guide to Sustainable Aviation Fuel22IntroductionWhat is sustainable aviation fuel?How SAF fits into the aviation decarbonisation planThe different types of SAF:feedstocksThe different types of SAF:production pathwaysGetting it right:a commitment to sustainabilityThe scale-up:from trials to universal useKey challenges and the next stepsDefinitions,acknowledgements and referencesIn the airOnce the lab and ground testing has been completed,the SAF is ready to be tested on aircraft under normal operating conditions.During the early years of SAF development,a number of airlines provided aircraft for flight trials designed to:provide data to support fuel qualification and approval for use by the aviation industry;demonstrate that SAF is safe and reliable;and stimulate SAF research and development.During the test flight,pilots perform a number of standard tests,as well as simulating exceptional circumstances,to ensure the SAF can withstand use under any operating condition.Technical requirements for SAF A fuel that can directly substitute conventional jet fuel with no requirement for different airframe,engine or logistical infrastructure(i.e.,a drop-in fuel).A high-performance fuel that can withstand a wide range of operational conditions.A fuel that meets or exceeds current jet fuel specifications.FLIGHT TRIALS EVALUATION OF ENGINE PERFORMANCE DURING ALL PHASES OF FLIGHT:INCLUDING A NUMBER OF EXTRAORDINARY“MANOEUVRES”(E.G.,SHUTTING DOWN THE ENGINE IN-FLIGHT AND ENSURING IT CAN RESTART).This flight profile is an example of one of the SAF trials.WITH SAFANDFOSSIL JET FUEL MIXBEFOREAFTERDURINGSHUTDOWNAND RESTARTQUICKACCELERATIONS/DECELERATIONSREPEAT ENGINERESTARTS ANDSIMULATED GO-AROUNDENGINE ACCELERATIONON LANDINGSTARTTAXITAKE-OFFLANDINGTHE DATA RECORDEDIS ANALYSEDBY ENGINEERSMaking sure SAF is fit to flyBeginners Guide to Sustainable Aviation Fuel23IntroductionWhat is sustainable aviation fuel?How SAF fits into the aviation decarbonisation planThe different types of SAF:feedstocksThe different types of SAF:production pathwaysGetting it right:a commitment to sustainabilityThe scale-up:from trials to universal useKey challenges and the next stepsDefinitions,acknowledgements and referencesThe testing continuesEven though we have undertaken extensive testing for the first phase of SAF deployment,the aerospace sector is working to ensure 100%compatible aircraft15.The A380 is the third Airbus aircraft(following the A350 and the A319neo)to test unblended sustainable aviation fuel.The A380 test in March 2022 lasted about three hours and operated one of its engines on 100%SAF.It was also the first Airbus flight test to use 100%SAF on all flight phases,from take-off and climb to cruise and landing.These flights were supported by engine manufacturers to ensure engine compatibility;with Pratt&Whitney providing support for the Auxiliary Power Unit(APU).While the first flight test phase focused on outboard engine behaviour of 100%SAF and APU testing,the forthcoming second flight test phase will test this fuel type on the inboard engine and its impact on fuel gauging.Due to the A380s engine and fuel system configuration,analysing engine and fuel system behaviours with 100%SAF will be managed over multiple flights.Airbus is committed to deliver its commercial aircraft capable and certified to fly on 100%SAF by 2030.In 2021,Boeing committed to deliver its commercial aircraft capable and certified to fly on 100%SAF by 2030.This is an important step,given these aircraft will still be in the skies in 2050,a time when aviation needs to be using predominantly SAF.For several years Boeing has been working on enabling the safe introduction of 100%SAF.In 2018,the Boeing ecoDemonstrator made the industrys first commercial aircraft test flight with 100%SAF in both engines of a 777 Freighter in partnership with FedEx.In February 2023,Boeing announced a pivotal testing milestone the development of jet reference fluids to enable SAF compatibility testing to help fulfill the companys commitment to producing 100%SAF-capable airplanes.ApprovalDue to the very strict standards required in the aviation industry,SAF must be approved as safe and appropriate for commercial use.The aviation industry works closely with international fuel specification bodies,such as ASTM International to develop standards and certificates.The process includes the test programme;the original equipment manufacturer internal review;and a determination by the specification body as to the correct characteristics for the fuel.The approval process looks at a minimum of 11 key properties,including energy density,freezing point,appearance,viscosity,and composition.Once a fuel has been fully approved,it is recognised as jet fuel and can be used without any restrictions.Making sure SAF is fit to flyBeginners Guide to Sustainable Aviation Fuel24IntroductionWhat is sustainable aviation fuel?How SAF fits into the aviation decarbonisation planThe different types of SAF:feedstocksThe different types of SAF:production pathwaysGetting it right:a commitment to sustainabilityThe scale-up:from trials to universal useKey challenges and the next stepsDefinitions,acknowledgements and referencesTo become approved for use,SAF must meet certain specifications from the hundreds of aviation and fuels experts meeting at ASTM.Once it has demonstrated compliance with the requirements,it is blended with conventional jet fuel at no more than 50%by volume(according to current standards)and re-tested to show compliance.The reasons for the current blend limits are to ensure the appropriate level of safety and compatibility with the aircraft fuelling systems.This is mainly due to the level of aromatic compounds found in conventional fossil-based fuels that are necessary for some systems that use nitrile rubber seals.It is likely that higher blend limits will be approved in the future as synthetic aromatic compounds are approved for use and as major aircraft manufacturers work to ensure aircraft are compatible with 100%SAF by around 2030.Once a SAF has been fully qualified it is recognised as jet fuel and can be used without any restrictions,allowing it to become compliant with other international standards.CriteriaExplanationJet A-1 specificationFlash pointThe temperature at which the fuel ignites in the engine to cause combustion to occur(C)38 minimumFreezing pointThe temperature at which the fuel would freeze(C)-47Combustion heatThe amount of energy that is released during combustion,per kilo of fuel (MJ/kg)42.8 MJ/kg minimumViscosityThe thickness of the fluid or ability to flow(mm2/s)8.000 maxSulphur contentThe amount of sulphur in the fuel(parts per million)0.30DensityHow heavy the fuel is per litre(kg/m3)775-840JET FUEL SPECIFICATIONSMaking sure SAF is fit to flyBeginners Guide to Sustainable Aviation Fuel25IntroductionWhat is sustainable aviation fuel?How SAF fits into the aviation decarbonisation planThe different types of SAF:feedstocksThe different types of SAF:production pathwaysGetting it right:a commitment to sustainabilityMaking sure SAF is fit to flyKey challenges and the next stepsDefinitions,acknowledgements and referencesThe scale-up:from trials to universal useTHE SCALE-UP:FROM TRIALS TO UNIVERSAL USE Economic viability of SAF Over time,it is expected that SAF will become economically viable and compete with fossil-based fuels as costs are lowered by improvements in production technology,the use of lower-cost feedstocks and through economies of scale in production,in addition to increases in costs of using fossil fuels.Governments have historically bridged the cost/price gap for consumers of new energy sources by providing economic incentives and support mechanisms.This is also true for new sustainable fuels,including SAF.Governments in the EU,UK,US,Canada,and Brazil have existing incentive programmes applicable to SAF,and more governments are considering support mechanisms.SAF also provides valuable economic opportunities to communities that can develop new sources of income including in many developing nations.It is estimated that up to 14 million jobs could be created or sustained by the shift to SAF,creating new energy industries around the world:whereas 90%of fossil fuels come from just 22 countries today,sustainable alternatives could create opportunities in almost every country.Around 1.4 million people could be employed in the production facilities themselves and up to 12.6 million in the construction of facilities,collecting feedstocks(such as used cooking oil and agricultural waste)and the supply chain and logistics16.The fossil fuel industry has a 100-year head start compared to SAF,which is still emerging as an energy source.A concerted effort by governments and industry alike is required to foster these promising renewable options to help drive their long-term viability.Since the first test flight in 2008,technological progress has been remarkable.However,the actual uptake of SAF is modest relative to total industry demand.This is in part due to SAF still being produced in relatively small quantities.Without economies of scale,the cost of SAF remains higher than traditional jet fuel and this price impediment,along with the limited supply is limiting broader uptake throughout the aviation industry.For SAF to be scaled up to commercially viable levels,substantial capital is required to develop the refining and process capacity.Commercialisation of SAF challengesMoving a technology from the research to the commercial phase can be extremely challenging and requires substantial investment.Building a small-scale demonstration facility requires a fraction of the capital required to develop a commercial scale facility.However,even if a demonstration facility performs as expected,moving from small to commercial scale can still be risky.Addressing this funding gap must be a priority for policy makers who have the available tools and mechanisms to bridge the gap and enable progress in this new industry.This could be by direct investment or by providing support to the private sector,for example,though blended financing.As SAF facilities are de-risked,the cost of production will fall and the cost of the new SAF will drop considerably,as has been seen in other renewable energy markets.Global policy developments are making SAF a more important strategic consideration for aircraft operators which has resulted in major forward purchase agreements from airlines,with most able to negotiate SAF supplies at an only slightly higher cost than Beginners Guide to Sustainable Aviation Fuel26IntroductionWhat is sustainable aviation fuel?How SAF fits into the aviation decarbonisation planThe different types of SAF:feedstocksThe different types of SAF:production pathwaysGetting it right:a commitment to sustainabilityMaking sure SAF is fit to flyKey challenges and the next stepsDefinitions,acknowledgements and referencestraditional jet fuel once subsidies have been taken into account.As of early 2023,around$40 billion in SAF purchase agreements have been made by airlines.As more airlines and operators commit to purchasing SAF,including projects to deploy at airports,existing producers will attract more investment and the incentive to start new SAF companies will be created.As the economic potential of SAF is increasingly demonstrated,traditional energy companies are expected to use their investment resources to acquire or develop SAF businesses as part of their total product offering.We are already starting to see this happen with increasing numbers of SAF commitments and production facilities being announced.Under the ICAO CORSIA(Carbon Offsetting and Reduction Scheme for International Aviation)agreement,the use of SAF by aircraft operators can count towards their net fuel use and reduce an operators CO2 emissions reduction obligation under the scheme.The use of SAF will be taken into consideration under CORSIA.Bringing SAF from feedstock to jet fuel supply This requires the production of sufficient sustainable raw materials and the industrial capability to process and refine it into SAF.The worldwide aviation industry consumed some 363 billion litres of jet fuel in 2019,which is 8%of global liquid fuel use17.Since 2011,SAF has been approved as suitable for use on commercial flights.However,ensuring economically competitive feedstock supply to sustain production has been an ongoing challenge.The worldwide aviation industry consumes some 363 billion litres of jet fuel annually.According to the ATAG Waypoint 2050 report(September 2021),around 5.6 million tonnes or 7 billion litres of the total aviation fuel supply could be SAF by 2025 and without further policy measures,around 6-10%of supply by 203018.Substantial progress has been made in the number of off-take agreements between suppliers and aircraft operators:in 2019 around$7.5 billion worth of forward purchases of SAF had been committed by airlines.Today,that stands at over$40 billion.As of publication,there are 14 airports worldwide that have regular supplies of SAF,including:Los Angeles,San Francisco,Oslo,Bergen,Oakland and Stockholm.There are also a number of other airports currently exploring the possibility of regularly supplying SAF to airlines and operators flying out of them.SAF is just one product generatedWhen fuels are being refined either fossil fuel or renewable fuels there is very seldom just one product generated.From a barrel of oil,a refinery can produce diesel,jet fuel,plastic,chemicals,automobile petrol/gas,lubricants and so forth.The same is often the case with refineries processing alternative fuels,although the product slate is often more specialised.Refineries can also be tweaked to produce more SAF or more renewable diesel,depending on market conditions.The scale-up:from trials to universal useBeginners Guide to Sustainable Aviation Fuel27IntroductionWhat is sustainable aviation fuel?How SAF fits into the aviation decarbonisation planThe different types of SAF:feedstocksThe different types of SAF:production pathwaysGetting it right:a commitment to sustainabilityMaking sure SAF is fit to flyKey challenges and the next stepsDefinitions,acknowledgements and referencesBook and claim helping scale up SAF deploymentBook and claim is a mechanism that will be used in the medium-term to help scale up aviation SAF deployment in the most efficient way,thereby accelerating the industrys decarbonisation efforts.It is a solution that will address the initial limited supply of SAF versus the growing demand and will enable airlines and operators to purchase SAF without being geographically connected to a SAF supply site.Before the full implementation of SAF development globally,it will be more economically efficient to produce SAF in certain parts of the world than in others.Airlines and operators wishing to take part in the early adoption of SAF,therefore,may wish to support SAF production sites in different parts of the world even if they do not fly to those locations.The book and claim system will save on shipping SAF around the world(which would increase complexity and emissions)as it focuses on decoupling the environmental credits from the physical SAF.An airline,therefore,can buy the SAF it needs where it is most competitively produced and get the credit for the purchase of the fuel by reducing the CO2 emissions it accounts for in its annual reporting.However,the physical SAF can be incorporated into the distribution systems of local airports located close to the SAF plant.Other airlines or operators using that airport will use the physical SAF,but only the purchasing airline will receive the credit for having purchased it and supported the scaling up of SAF.The scale-up:from trials to universal useBeginners Guide to Sustainable Aviation Fuel28IntroductionWhat is sustainable aviation fuel?How SAF fits into the aviation decarbonisation planThe different types of SAF:feedstocksThe different types of SAF:production pathwaysGetting it right:a commitment to sustainabilityMaking sure SAF is fit to flyThe scale-up:from trials to universal useDefinitions,acknowledgements and referencesKey challenges and the next stepsKEY CHALLENGES AND THE NEXT STEPSWith seven pathways now approved for the production of SAF,and other potential pathways under consideration,options are increasing for the deployment of SAF,from both a technical perspective and feedstock diversity angle.In January 2016,SAF entered the commercial deployment phase with the first continuous production and supply entering the common airport distribution system at Oslo Airport,with Los Angeles International Airport and Stockholm Arlanda Airport following later in the same year.The industry has called on governments to assist potential SAF suppliers to develop the necessary feedstock and refining systems at least until the fledgling industry has achieved the necessary critical mass.Key challenges to SAFs deploymentThe extensive commercial flights and testing in numerous demonstration flights by 50 different airlines19 has illustrated that the barriers to increased SAF deployment are not technical,but rather economic and political in nature.Some of the key challenges that remain include:ensuring that the cost is competitive,in order to compete with petroleum-based jet fuel;ensuring an adequate supply of sustainable feedstock and low-carbon energy;ensuring that aviation receives an appropriate allocation,relative to other forms of transport,of available sustainable feedstocks;ensuring that governments implement appropriate policy mechanisms to allow the SAF industry to scale up and deliver the economy of scale benefits,including incentivising the use of feedstocks to aviation as a priority over other sectors;reducing the risk for private investors to enable investment for more rapid SAF production capacity growth;ensuring all aircraft in the fleet are compatible with the use of 100%SAF a task expected to be complete around 2030.Until then,the 50%blend limit of SAF and conventional jet fuel will remain.A major challenge ensuring sufficient quantities and investmentOne of the major challenges for this new energy industry is building up the demand and,therefore,production of sufficient quantities of SAF to make it commercially viable.In other words,ensuring an adequate supply of sustainable feedstock,low-carbon energy sources and production capacity to start realising economies of scale.This in turn will require significant policy support,investment,and cooperation within industry,governments,research institutions,financial institutions and traditional energy producers.Seven pathways for SAF production have now been approved,with others undergoing assessment.Beginners Guide to Sustainable Aviation Fuel29IntroductionWhat is sustainable aviation fuel?How SAF fits into the aviation decarbonisation planThe different types of SAF:feedstocksThe different types of SAF:production pathwaysGetting it right:a commitment to sustainabilityMaking sure SAF is fit to flyThe scale-up:from trials to universal useDefinitions,acknowledgements and referencesThe use of SAF is expected to accelerate over the coming years as part of a wider shift toward lower carbon aviation energy sources,including low-carbon electricity and green hydrogen.It is modelled that aviation might need between 330-445 million tonnes(412556 billion litres)of SAF per year by 205020 in order to achieve its net-zero 2050 goal.The capital investment required has been estimated at some$1.5 trillion over 30 years or 6%of traditional oil and gas capital expenditure when averaged out each year21.Government commitment to net-zero by 2050Achieving net-zero carbon emissions by 2050 cannot be done by the aviation industry in isolation.Government support is one of the crucial elements.On 7 October 2022,governments meeting at the ICAO Assembly in Montreal adopted a long-term aspirational goal of net-zero carbon emissions for international flights by 2050,one of the only global sector-specific climate goals.This represents a milestone for the aviation sector.The air transport industry has always been able to work with governments to solve complex challenges and climate change is no different.Many States will need assistance in implementing a net-zero pathway in their own country.Financing the transition will be a priority for governments,industry and the investment sector.The build-up of SAF in this context will be key.A five-step plan for governments going forwardThere are five key steps that every government could take to help progress the energy transition for aviation and the upscaling of SAF production,thereby supporting green energy jobs in their countries:1.Setting up adequate and stable policy measures,including:a.De-risking public and private investments in SAF through appropriate financing and policy measuresb.Providing incentives for aircraft operators to use SAF from an early stage2.Fostering research into new SAF feedstock sources and refining processes3.Encouraging stakeholders to commit to robust international sustainability criteria4.Understanding local green growth opportunities whilst at the same time working with global institutions such as the UN aviation body:ICAO5.Establishing SAF development coalitions encompassing all parts of the supply chainWhile these are not minor hurdles,they are not insurmountable.The history of aviation is marked by people achieving extraordinary things,despite many at the time telling them it could not be done.The aviation industry is now on the verge of making another historical step forward,but the challenge of commercialising SAF is one that the entire industry needs to meet together.The industry made a bold commitment to start using SAF on commercial flights,a vision which was realised in 2011.It is very possible that a significant supply of alternative fuel in the jet fuel mix could be achieved by 2030 perhaps between 6-10%.It is now up to dedicated stakeholders across the aviation sector,with help from governments,feedstock and fuel suppliers and investors to ensure that the low-carbon,alternative future for flight becomes a reality.Key challenges and the next stepsBeginners Guide to Sustainable Aviation Fuel30IntroductionWhat is sustainable aviation fuel?The different types of SAF:feedstocksThe different types of SAF:production pathwaysGetting it right:a commitment to sustainabilityMaking sure SAF is fit to flyThe scale-up:from trials to universal useKey challenges and the next stepsDefinitions,acknowledgements and referencesHow SAF fits into the aviation decarbonisation planBeginners Guide to Sustainable Aviation Fuel31IntroductionWhat is sustainable aviation fuel?How SAF fits into the aviation decarbonisation planThe different types of SAF:feedstocksThe different types of SAF:production pathwaysGetting it right:a commitment to sustainabilityMaking sure SAF is fit to flyThe scale-up:from trials to universal useKey challenges and the next stepsDefinitions,acknowledgements and referencesAlternative fuel:has a specific meaning defined by ICAO,which is any fuel that has the potential to generate lower carbon emissions than conventional kerosene on a lifecycle basis.It is also used as a general term to describe any alternative to petroleum-based fuels,including liquid fuel produced from natural gas,liquid fuel from coal and biofuels.ASTM International:originally known as the American Society for Testing and Materials,this international organisation develops and publishes voluntary consensus technical standards for a wide range of materials,products,systems,and services.ASTM International works with aircraft and engine manufacturers,government authorities and fuel suppliers to set the standards for aviation fuels such as the required characteristics for jet fuel.Biodiesel:a fatty acid ester diesel fuel produced from biomass;chemically different from conventional and renewable diesel and other fuels from crude oil.Not suitable for use in aviation.Biomass:any renewable material,including wastes and residues,of biological origin(plants,algae,animal fats and so on).Carbon footprint:net amount of carbon dioxide emissions attributable to a product or service(emissions from production and combustion,minus absorption during plant growth).For fossil fuels,the absorption of carbon dioxide occurred millions of years ago and so their carbon footprint is simply 100%of their carbon output.Carbon-neutral:refers to balancing a measured amount of carbon released by an activity with an equivalent amount captured or offset.SAF represents a step towards carbon-neutrality:virtually all of the CO2 it releases during combustion has been previously absorbed by growing plants,however emissions from feedstock and fuel production and transport have to be subtracted.Net-zero is another term for a similar concept and often these terms are used interchangeably,but net-zero usually refers to a status of having reduced CO2 emissions as much as possible and then using out-of-sector carbon removals to deal with any remaining CO2.Carbon-neutral growth:the situation where an industry emits the same amount of carbon dioxide year on year while growing in volume.For the aviation industry this means being able to continue to increase passenger traffic and aircraft movements,while keeping net aviation industry emissions at the same level.Drop-in fuel:an alternative and completely interchangeable substitute for conventional fossil fuel that doesnt require changes in aircraft or engine fuel systems,distribution infrastructure or storage facility.It can be mixed interchangeably with existing jet fuel and as supply grows,the proportion of fuel used can also grow.Ethanol:a fuel produced from sugar-rich crops such as corn and sugarcane and used by ground vehicles,or potentially as a feedstock for the alcohol-to-jet process.Feedstock:raw material from which fuel is produced.Greenhouse gases:gases such as carbon dioxide(CO2),methane(CH4)and nitrous oxide(N2O),which trap the warmth generated from sunlight in the atmosphere rather than allowing it to escape back into space,replicating the effect glass has in a greenhouse.Human activities such as fossil fuel combustion and land-use change increase the emission of greenhouse gases into the atmosphere.Hydrocarbon fuel:an organic compound consisting of hydrogen and carbon found in crude oil,natural gas and coal.Crude oil is sent to the refinery where it can be separated to make jet fuel22.Jet A:commercial jet fuel specification for North America.DEFINITIONS,ACKNOWLEDGEMENTS AND REFERENCESBeginners Guide to Sustainable Aviation Fuel32IntroductionWhat is sustainable aviation fuel?How SAF fits into the aviation decarbonisation planThe different types of SAF:feedstocksThe different types of SAF:production pathwaysGetting it right:a commitment to sustainabilityMaking sure SAF is fit to flyThe scale-up:from trials to universal useKey challenges and the next stepsJet A-1:common jet fuel specification outside North America.(These two fuels are very similar and throughout this guide we used the term jet fuel to mean the fuel used by aviation).Kerosene:the common name for petroleum-derived jet fuel such as Jet A-1,kerosene is one of the fuels that can be made by refining crude oil.It is also used for a variety of other purposes.Net-zero carbon emissions:as identified by the Intergovernmental Panel on Climate Change(IPCC)is a situation“Where anthropogenic CO2 emissions are balanced globally by anthropogenic CO2 removals over a specified period23.”Definitions,acknowledgements and referencesNon-conventional advanced fuels:alternate fuels,also known as non-conventional fuels and advanced fuels,are any materials or substances that can be used as fuels,other than conventional fuels.Some well-known alternate fuels include biodiesel,bioalcohol(methanol,ethanol,propanol,and butanol),refuse-derived fuel,waste derived oil,hydrogen,vegetable oil,and other biomass sources24.Renewable hydrocarbon:produced from biomass sources through a variety of biological,thermal and chemical processes25.Sustainability:the ability for resources to be used in such a way so as not to be depleted or to create irreversible damage.For humans to live sustainably,the earths resources must be used at a rate at which they can be replenished,providing economic growth and social development to meet the needs of today without compromising the needs of tomorrow.Image creditsPage 14:AirbusPage 16:Pratt&WhitneyPage 17:AirbusPage 20:BoeingPage 23:BoeingPage 27:BoeingPage 29:Getty ImagesPage 30:Pratt&WhitneyPage 32:AirbusBeginners Guide to Sustainable Aviation Fuel33IntroductionWhat is sustainable aviation fuel?How SAF fits into the aviation decarbonisation planThe different types of SAF:feedstocksThe different types of SAF:production pathwaysGetting it right:a commitment to sustainabilityMaking sure SAF is fit to flyThe scale-up:from trials to universal useKey challenges and the next steps1 Aviation:Benefits Beyond Borders(ABBB)global report,2020,page 11-122 Aviation:Benefits Beyond Borders(ABBB)global report,2020,page 103 Aviation:Benefits Beyond Borders(ABBB)global report,2020,page 124 Aviation:Benefits Beyond Borders(ABBB)global report,2020,page 125 Aviation:Benefits Beyond Borders(ABBB)global report,2020,page 106 Aviation:Benefits Beyond Borders(ABBB)global report,2020,page 117 Aviation:Benefits Beyond Borders(ABBB)global report,2020,page 138 Aviation:Benefits Beyond Borders(ABBB)global report,2020,page 139 Aviation:Benefits Beyond Borders(ABBB)global report,2020,page 1110 Aviation:Benefits Beyond Borders(ABBB)global report,2020,page 1311 ATAG,Waypoint 2050 report,page 1412 ASTM International Overview:https:/www.astm.org/about/overview.html13 The Commercial Aviation Alternative Fuels Initiative:https:/www.caafi.org/default.aspx 14 Aviation Benefits Beyond Borders website:“Aviation supporting the UN Sustainable Development Goals”,https:/aviationbenefits.org/un-sustainable-development-goals/15 Airbus press release,2022“This A380 is the latest to test 100%SAF”:https:/bit.ly/3M36AnW16 ICF Analysis in Fuelling Net-Zero,commissioned by ATAG for Waypoint 2050,September 2021:https:/aviationbenefits.org/downloads/fueling-net-zero/17 Aviation:Benefits Beyond Borders(ABBB)global report,2020,page 13 18 Aviation:Benefits Beyond Borders(ABBB)global report,2020,page 3619 IATA analysis on SAF:http:/bit.ly/3zKN6gR20 ATAG,Waypoint 2050 report,page 421 ATAG,Waypoint 2050 report,page 522 Independent Statistics and Analysis,U.S.Energy Information Administration,2022“Oil and petroleum products explained”:http:/bit.ly/3nwEc3w23 Climate Champions(unfccc.int)2021,Get net-zero right:A how-to guide:https:/bit.ly/3KkaWWt24 ScienceDirect paper,Fuel Flexible Energy Generation,2016:https:/bit.ly/3lNnsEN25 Rincrude,Renewable Crude Derived Energy Association,Renewable Hydrocarbon Fuels,2021:http:/bit.ly/3KmZdXvDefinitions,acknowledgements and referencesThis Beginners Guide was made possible due to input from across the industry,including Airbus:Melanie Astruc,Frederic Eychenne,Kevin Goddard,Steven le Moing.Airlines for America:Sean Newsum and Tim Pohle.ACI:Michael Rossell,Astha Srivastava.Association of Asia Pacific Airlines:Subhas Menon.Boeing:Robert Boyd.CANSO:Michelle Bishop.GE Aerospace:Jieun Kirtley,Joanne Morello.IATA:Daniel Bloch,Alejandro Block,Mnica Soria Baledn.Pratt&Whitney:Michael Foley,Joshua Frederickson,Mads Neumann,Graham Webb.Rolls-Royce:Simon Carlisle,Alastair Hobday,Jen Houghton,Katja Lhnert.Southwest Airlines:Helen Giles.And the kind support of:IntroductionWhat is sustainable aviation fuel?The different types of SAF:feedstocksThe different types of SAF:production pathwaysGetting it right:a commitment to sustainabilityMaking sure SAF is fit to flyThe scale-up:from trials to universal useKey challenges and the next stepsDefinitions,acknowledgements and referencesAir Transport Action Group 33 Route de lAroportP.O.Box 491215 Geneva 15 Switzerland T: 41 22 770 2672www.atag.org informationatag.orgProduced with the kind support ofHow SAF fits into the aviation decarbonisation plan
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April 2024202223Airport monitoring reportiiACCC|Airport monitoring report|202223Australian Competition and Consumer Commission Ngunnawal 23 Marcus Clarke Street,Canberra,Australian Capital Territory,2601 Commonwealth of Australia 2024This work is copyright.In addition to any use permitted under the Copyright Act 1968,all material contained within this work is provided under a Creative Commons Attribution 4.0 Australia licence,with the exception of:the Commonwealth Coat of Arms the ACCC and AER logos any illustration,diagram,photograph or graphic over which the Australian Competition and Consumer Commission does not hold copyright,but which may be part of or contained within this publication.The details of the relevant licence conditions are available on the Creative Commons website,as is the full legal code for the CC BY 4.0 AU licence.Requests and inquiries concerning reproduction and rights should be addressed to the Director,Corporate Communications,ACCC,GPOBox 3131,Canberra ACT 2601.Important notice The information in this publication is for general guidance only.It does not constitute legal or other professional advice,and should not be relied on as a statement of the law in any jurisdiction.Because it is intended only as a general guide,it may contain generalisations.You should obtain professional advice if you have any specific concern.The ACCC has made every reasonable effort to provide current and accurate information,but it does not make any guarantees regarding the accuracy,currency or completeness of that information.Parties who wish to re-publish or otherwise use the information in this publication must check this information for currency and accuracy prior to publication.This should be done prior to each publication edition,as ACCC guidance and relevant transitional legislation frequently change.Any queries parties have should be addressed to the Director,Corporate Communications,ACCC,GPO Box 3131,Canberra ACT 2601.ACCC 04/24_24-08 www.accc.gov.auAcknowledgment of countryThe ACCC acknowledges the traditional owners and custodians of Country throughout Australia and recognises their continuing connection to the land,sea and community.We pay our respects tothem and their cultures;and to their Elders past,present and future.iiiACCC|Airport monitoring report|202223ContentsGlossary and abbreviations 1Key messages 4Key results 5Executive summary 6Key performance indicators 91.Introduction 111.1 The ACCCs monitoring role 111.2 The structure of this report 122.Industry activity and developments 132.1 Passenger numbers up but recovery largely still not complete,particularly for international 132.2 The Australian Government is reviewing policies for the aviation sector 162.3 Government considering ACCC advice on enhanced financial and quality reporting 183.Totalairportfinancialperformance193.1 Total airport revenue continued to increase 193.2 Total airport earnings increased,with revenues increasing more than costs 203.3 Aeronautical operations are the mainstay of airports,but margins are higher in car parking 223.4 All 4 airports recorded an overall quality of service rating as good 234.Aeronautical services 274.1 Revenues from aeronautical operations were closer to pre-pandemic levels 274.2 Airports reported first profits on aeronautical operations since 201920 314.3 All airports reported positive returns on their aeronautical assets 334.4 Airports starting to resume aeronautical investments 33ivACCC|Airport monitoring report|2022235.Car parking 385.1 Car parking throughput increased as passenger numbers rose 385.2 Car parking revenue grew strongly at all airports 395.3 Car parking operating expenses back to pre-pandemic levels for Perth and Sydney 405.4 Car parking operating profits and margins were above pre-COVID levels at most airports 415.5 Car parking prices 435.6 Investment in carparking facilities 465.7 Quality of car parking services and facilities 476.Landside transport access 496.1 The number of vehicles using landside access continued to recover in 202223 496.2 Landside transport access revenues rose but had not yet returned to pre pandemic levels 516.3 Landside investments 526.4 Quality of landside transport access services and facilities 53Appendix:background and methodology 56A.Aeronautical measures 56B.Quality of service ratings 64C.Monitoring landside transport access operations 65D.Monitored airports major investments 661ACCC|Airport monitoring report|202223Glossary and abbreviations ACCCAustralian Competition and Consumer CommissionAerobridge Allows passengers to board and disembark aeroplanes directly from/to the terminal gate lounge.Avoids need for passengers to go outside and use the apron.Aeronautical services and facilitiesServices and facilities at an airport that are necessary for the operation and maintenance of civil aviation at the airport,and includes:(a)aircraft-related services and facilities;and(b)passenger-related services and facilities(Airports Regulations 2024 regulation 20).Aircraft-related services and facilities Services and facilities provided by airports that are specifically utilised by aircraft(for example,runways,aircraft parking bays and taxiways).The full list of aircraft-related services and facilities for monitoring purposes is in the Airports Regulations 2024.Airline surveys Each year,the ACCC sends domestic and international airlines a survey asking them to rate on a scale of 1 to 5 the availability and standard of services and facilities provided by monitored airports.Airports Act Airports Act 1996 Airports Regulations Airports Regulations 2024Airside The parts of the airport grounds and buildings to which the non-travelling public does not have free access.Apron Where planes park and are refuelled,passengers embark and disembark and/or where planes are loaded and unloaded.At-distance car park A car park that is located within the airport precinct but outside of reasonable walking distance to the terminal.Access to the terminal is via a shuttle that is operated by the airport.At-terminal car park A car park that is within walking distance of the terminal.Competition and Consumer Act Competition and Consumer Act 2010 COVID-19 Coronavirus pandemic declared by the World Health Organisation on 11 March 2020.EBIT Earnings before interest and taxes.EBITA Earnings before interest,taxes and amortisation.EBITDA Earnings before interest,taxes,depreciation and amortisation.2ACCC|Airport monitoring report|202223General aviation Aircraft operations that are not regular public transport,such as private charter and aircraft training flights,and Royal Flying Doctor Services.Landside The part of the airport grounds and the part of the airport buildings to which the non-travelling public has free access.Long-term parking Parking for a period of one or more days.Monitored airports Airports which are subject to reporting requirements and price and quality of service monitoring and are specified in Parts 7 and 8 of the Airports Regulations 1997(expired)and the Direction to monitor aeronautical services at major airports 12 June 2012.Currently Brisbane,Melbourne(Tullamarine),Perth and Sydney(Kingsford Smith)airports.MTOW Maximum take-off weight.Objective indicators Principally the aspects of airport services and facilities listed in the Airports Regulations 2024 to be monitored and evaluated by the ACCC and of which monitored airports are required to keep records.Includes both physical infrastructure(for example,the number of check-in desks and flight information screens)and other measurements(for example,certain passenger numbers).Off-airport car park A car park that is located outside of the airport precinct and operated by a third party.Access to the terminals is provided by a shuttle bus that is provided by the off-airport car park operator.Operating profit Earnings(revenue less cost)before interest,taxes and amortisation(EBITA).Operating profit margins Operating profit(EBITA)as a percentage of revenue.Passenger-related services and facilitiesServices and facilities provided by airports that are specifically used by passengers(for example,check in desks,aerobridges and gate lounges).The full list of services and facilities for monitoring purposes is in the Airports Regulations 2024.2019 Productivity Commission inquiry Productivity Commission 2019,Economic Regulation of Airports,Report no.92,Canberra.Peak hour The hour that,on average for each day in the financial year,has the highest number of(arriving/departing/total)passengers.Quality of service A metric derived by aggregating the quality-of-service monitoring results sourced from objective indicators and surveys of airlines and passengers on the quality of services and facilities provided by the monitored airports.Real terms A value expressed in the money of a particular base time period(for example,202223 dollars).Values in real terms remove the impact of inflation and provide a better comparison of values over time.3ACCC|Airport monitoring report|202223Return on assets Ratio of EBITA relative to average tangible non-current assets.The ACCC uses a line in the sand approach to valuing aeronautical assets(see Appendix A).Short-term parking Parking for up to one day.T1/T2/T3/T4 Terminal 1/Terminal 2/Terminal 3/Terminal 4TaxiwayA road for aircraft that connects runways with airport facilities including ramps,hangers and terminals.4ACCC|Airport monitoring report|202223Key messagesBrisbane,Melbourne,Perth and Sydney airports reported a significant rebound in passenger numbers in 202223,the first full year since the end of interstate and international travel restrictions in Australia due to the pandemic.The airports reported a total of 100.7 million passengers,up 127.4%from the previous year.The recovery in passenger numbers translated to a growth in aeronautical revenue and operating profits.The airports collectively earned$2.01 billion in aeronautical revenues over the year,up 91%since 202122.Aeronautical operating profits and margins are now positive and returning to pre-pandemic levels.Car parking operating profits increased significantly in 202223.The 4 airports collectively earned$337 million in operating profits from car parking activities,an increase of 168%since 202122.All 4 monitored airports reported operating profit margins above 60%for car parking operations.The airports revenues from landside transport access services such as those provided to taxis,rideshare operators and buses grew by 125%in 202223 to$56.7 million.The ACCC resumed its quality of service reporting during the 202223 year following its suspension during the pandemic.Ratings are calculated from passenger and airline surveys and objective measures.Possible ratings are excellent,good,satisfactory,poor and very poor.In 202223,all 4 airports recorded an overall rating of good for their quality of service and facilities.5ACCC|Airport monitoring report|202223Key resultsNUMBER OF PASSENGERSInternationalDomesticCAR PARKING OPERATING PROFIT MARGINS*AVERAGE DAILY CAR PARKING THROUGHPUTQUALITY OF SERVICE RATINGS*BNEMELSYD 72.6.6 pp66.0%.9 pp66.2%8.2 pp62.1(.7 ppPER02,0004,0006,0008,00010,00012,000MELGOODPERGOODSYDGOODBNEGOOD01020304050Passengers(millions)BNEMELPERSYDBNEMELPERSYDSYD23.3m 119.3.2m 294.4%PER10.9m 59.2%3.3m 551.8%MEL22.5m 104.4%8.3m 330.4%BNE16.1m 70.6%4.1m 380.6%-40%-30%-20%-10%0 0%BNEMELPERSYD202122202223AERONAUTICAL OPERATING PROFIT MARGINS*Ratings are calculated from passenger and airline surveys and objective measures.Possible ratings are excellent,good,satisfactory,poor and very poor.*Operating profit margin is measured as earnings before interest,taxes and amortisation(EBITA)as a percentage of revenue.201819201920202021202122202223201819201920202021202122202223-5.9%-38.8%-0.05%-26.9(.8.94.6).1jCCC|Airport monitoring report|202223Executive summaryA significant recovery in passengers in 202223 helped the airports to return to aeronautical profits In 202223 the 4 monitored airports of Brisbane,Melbourne,Perth and Sydney benefitted from a significant rebound in passenger numbers from the lows of the COVID-19 pandemic.The airports reported a total of 100.7million passengers,representing growth of 127.4%over the year.The airports,however,did not record full recovery to pre-pandemic levels.Domestic operations led the recovery as many Australians took local holidays and visited family and friends in the first full year since the end of state border closures due to the pandemic.However,the 72.8 million domestic passengers were still 10.4%lower than 201819 levels as major domestic airlines held back capacity,which they said was in response to high rates of cancellations,delays and mishandled bags.International operations have been slower to recover.The airports reported 27.9 million international passengers in 202223,which was 31.0low 201819 levels.It was only in July 2022 that the final international travel restrictions were lifted,enabling non-vaccinated travellers to travel to and from Australia.The rate of recovery was held back to some degree by ongoing travel restrictions in China and Japan for much of 202223.The recovery in passenger numbers translated to a growth in aeronautical revenue and operating profits.The airports collectively earned$2.01 billion in aeronautical revenue over the year,up 91%in real terms from the previous year.The airports made an operating profit of$567 million from aeronautical activities in 202223 after reporting a loss of$226 million the previous year.The rebound in aeronautical activity at all 4 airports had a more notable impact on revenues and operating profit than expenses,because the airports were continuing to incur fixed costs while they stayed open during the pandemic when few people were flying.All 4 airports reported significant increases in operating profit margins for aeronautical activities in 202223.Perth Airports 34.6ronautical profit margin was slightly higher than the 34.2%it reported in 201819.The aeronautical profit margins reported by the other airports remained below pre-pandemic levels,with Brisbane Airport at 28.8%(46.9%in 201819),Sydney Airport at 29.1%(45.1%in 201819)and Melbourne Airport at 22.9%(40.1%in 201819).During the pandemic the airports were relatively conservative with investments and reduced or delayed projects where possible.The investment levels for all airports pre-pandemic(201819)and the first year of the pandemic(201920)were$1.43 billion and$918 million in aeronautical assets,respectively.In 202223 the airports retained a modest investment program,investing$559 million in aeronautical operations.This represented an increase of 37%compared to the previous year,and 5.9%of the airports combined aeronautical asset base.Melbourne Airport contributed 62%of the 202223 investment in aeronautical operations by the monitored airports.7ACCC|Airport monitoring report|202223Three airports earned higher car parking profits than before the pandemicCar parking operating profits increased significantly in 202223.The number of people using the car parks increased substantially with the recovery in flying,while the airports also advised that people were increasingly choosing to drive and park at the airport over other transport modes.Profits grew as the vehicle throughput lifted revenue more than expenses.The 4 airports collectively earned$337 million in operating profits from car parking activities,which is up 168%from 202122 and 6%from 201819(both in real terms).Sydney Airports car parking operating profits increased fourfold in 202223 to$80.8 million but remained 23low 201819 levels.The other 3 airports have grown their car parking operating profits to above pre-COVID-19 levels.In 202223,Melbourne Airports operating profit increased by 226%to$106.2 million,Brisbane Airports operating profit increased by 126%to$89.9 million,and Perth Airports operating profit increased by 80%to$60.1 million.All 4 monitored airports reported operating profit margins above 60%for car parking operations,with Brisbane Airport the highest at 72.6%.Brisbane,Melbourne and Perth airports reported higher car parking operating profit margins than in 201819.Sydney Airports car parking operating profit margin of 62%was slightly below its pre-pandemic level of 68%.The price to park a car at the airport both short-term and long-term fell in real terms in 202223.Sydney and Brisbane airports were the most expensive for 30 to 60 minute parking at the terminal,while Melbourne Airport was the cheapest.For those parking at the terminal for up to 24 hours,Sydney Airport was the most expensive and Melbourne Airport was the cheapest.Landside revenues continued to growThe airports revenues from landside transport access services such as those provided to taxis,rideshare operators and buses grew by 125%in 202223 to$56.7 million.All 4 monitored airports continued to report an increasing take up of rideshare services.The rise in landside revenues coincided with the rebound in vehicles using landside access from 202122.8ACCC|Airport monitoring report|202223Return of quality of service and facilities reportingThe ACCC resumed its quality of service and facilities reporting during the 202223 year following a break during the pandemic(201920 to 202122).The monitored airports are assessed for quality of service using airline and passenger surveys1,as well as objective measures of performance.The possible ratings are:very poor,poor,satisfactory,good or excellent.All 4 airports achieved an average overall rating of good for their quality of service in 202223.These results were mainly driven by passenger ratings,which have generally remained high.Ratings from airlines were mixed,which has been a common theme over many years.For carparking and landside transport,passengers have generally been satisfied with the time taken to enter the car parks and the waiting time for taxis across the 4 monitored airports.The airports received a good rating from passengers across the services,on average,with Brisbane Airport achieving excellent for carpark waiting times at its domestic terminal.Perth Airport only achieved satisfactory for taxi waiting time at T4.1 The monitored airports survey passengers and the ACCC surveys airlines.9ACCC|Airport monitoring report|202223Key performance indicatorsTable i:Key aeronautical indicators for 202223AirportPassenger numbers(m)Aeronautical revenue($m)Aeronautical revenue per passenger($)Aeronautical operating profit($m)Aeronautical profitmargin(%)Return on aeronautical assets(%)Quality rating total airportBrisbane20.2m$395.4m$19.57$113.8m28.8%4.0%GoodMelbourne30.8m$507.1m$16.47$116.3m22.9%4.3%GoodPerth14.2m$276.8m$19.50$95.7m34.6%9.5%GoodSydney35.5m$829.9m$23.36$241.5m29.1%8.1%GoodSource:ACCC analysis of information from the monitored airports.Table ii:Changes in key aeronautical indicators from 202122 to 202223AirportPassenger numbers(%change)Aeronautical revenue(%change)Aeronautical revenue per passenger (%change)Quality rating total airport(change from 201819)Brisbane96.4.1%-7.3%SteadyMelbourne138.1.1%-16.8%SteadyPerth93.1y.2%-7.2%SteadySydney158.9.5%-24.1%SteadySource:ACCC analysis of information from the monitored airports.Table iii:Key car parking indicators for 202223AirportCar parking revenue($m)Car parking operating profit($m)Car parking profitmargin(%)Car parking spacesCar parking revenue per car park space($)Operating profitpercar park space($)Car parking share of total airport revenue(%)Brisbane$123.9m$89.9m72.6,961-15.0%Melbourne$160.9m$106.2m66.0&,654$6,038$3,98515.9%Perth$90.9m$60.1m66.2,689$4,006$2,65014.7%Sydney$130.1m$80.8m62.1,074$8,632$5,3579.5%Source:ACCC analysis of information from the monitored airports.Note:Brisbane Airport has claimed confidentiality over car parking revenue per car park space and operating profit per car park space.10ACCC|Airport monitoring report|202223Table iv:Changes in key car parking indicators from 202122 to 202223AirportCar parking revenue(%change)Operating profit(%change)Profitmargin(percentage point(pp)change)Car parking spaces(%change)Revenue per car park space(%change)Operating profitpercarpark space(%change)Brisbane81.06.5.6pp0.0%-Melbourne97.75.7%.9pp0.0.75.7%Perth57.9.1%8.2pp17.24.7S.6%Sydney115.801.1(.7pp27.6i.1!4.2%Note:Brisbane Airport has claimed confidentiality over revenue per car park space(%change)and operating profit per car park space(%change).11ACCC|Airport monitoring report|2022231.Introduction1.1 The ACCCs monitoring roleIn this report the ACCC presents results of our monitoring of prices,costs and profits,and quality,at Brisbane,Melbourne(Tullamarine),Perth and Sydney(Kingsford Smith)airports for 202223.We focus monitoring on the airports supply of aeronautical,car parking and landside transport access services for example,for rideshare and taxis.Our monitoring functions originate from directions issued by the Assistant Treasurer pursuant to section 95ZF of the Competition and Consumer Act 2010.The Australian Government established the price monitoring regime in 2002 following consideration of the recommendations of a Productivity Commission inquiry.Before that,the ACCC regulated airport prices.The government intended that the move from a price regulation regime to a monitoring regime would facilitate investment and innovation.It also sought to retain some oversight of the exercise of market power by the airports in their dealings with airlines and other customers.It is generally accepted that Australias 4 major airports have market power.As a result,there is a concern that at some airports,airport users such as airlines do not possess enough bargaining power to ensure appropriate commercial outcomes.An airport not constrained by competition or regulation could be expected to exercise its market power to earn monopoly profit to the detriment of the broader Australian economy.For example,an airport may not face enough incentive to constrain its prices and/or improve the quality of its services and facilities.It could also under or over invest in infrastructure,potentially leading to inefficient outcomes.Due to a lack of competitive pressure,an unconstrained airport may also lack the incentive to operate efficiently or adopt innovative technologies and service models.Price monitoring,which is a lighter handed measure than regulation,can provide some transparency over the airports performance and allows for some general observations to be made regarding whether they are taking advantage of the lack of competition.This can help inform the Australian Government about whether some form of regulation may be required to better protect consumers and promote more efficient outcomes.Transparency of performance may also help airlines in their negotiations with airports regarding prices and service standards.Monitoring is limited in its ability to address behaviour that is detrimental to consumers.For example,monitoring does not directly restrict the airports from increasing prices and/or allowing service quality to decline.In particular,it does not provide the ACCC with the ability to intervene in the airports setting of terms and conditions of access to the airports infrastructure.12ACCC|Airport monitoring report|2022231.2 The structure of this reportThe structure of the report is as follows:Chapter 2 looks at airport passenger numbers and selected aviation policy developments.Chapter 3 provides an overview of the revenues and profits of the monitored airports total operations.Chapters 4,5 and 6 focus on aeronautical,car parking and landside transport access operations respectively.The Appendix includes further background information and discussion of reporting methodologies.All airport monitoring reports can be found on the ACCC website at https:/www.accc.gov.au/regulated-infrastructure/airports-aviation/airports-monitoring.The webpage for each report will include links to the regulatory accounts for the monitored airports for that year and supplementary information to the report,such as the various forms of data used in that report.13ACCC|Airport monitoring report|2022232.Industry activity and developmentsKey pointsIn 202223 the 4 monitored airports of Brisbane,Melbourne,Perth and Sydney continued to benefit from a rebound in passenger numbers.The 4 airports reported a total of 100.7million passengers,representing growth of 127.4%over the year.The airports,however,did not record full recovery to pre-pandemic levels.Domestic operations led the recovery as many Australians took local holidays and visited family and friends in the first full year since the end of state border closures due to the pandemic.However,the 72.8 million domestic passengers were still 10.4%lower than 201819 levels as airlines held back capacity.Through its Aviation White Paper process,the Australian Government has been consulting to develop its long-term policies for the aviation sector through to 2050.The ACCCs submission discussed possible policy reforms to address airport market power,including providing access to arbitration to resolve disputes between airports and airlines.This chapter covers:202223 passenger numbersselected industry developments:the Australian Governments Aviation White Paper process which is to develop policies for the aviation sector through to 2050 the Australian Governments proposed reforms to the Sydney Airport demand management arrangements the status of the ACCCs 2023 advice to the government on airport financial reporting and quality monitoring.2.1 Passenger numbers up but recovery largely still not complete,particularly for internationalThe effects of the COVID-19 pandemic on the number of people flying in Australia were subsiding but still a factor in 202223.Passenger numbers for the 4 monitored airports were up on the previous financial year but the airports largely had not recovered to 201819(pre-COVID-19)levels,particularly for international passengers.Table 2.1 shows that 100.7 million passengers flew through the 4 monitored airports in 202223.This amount represents an increase of 127.4%since the previous financial year,but a decline of 17.2%compared with the last pre-pandemic year of 201819.The aggregate number of passengers travelling through the monitored airports was steadily increasing by about 2%to 4%a year until the COVID-19 pandemic,reaching a total of almost 122 million passengers in 201819.During the pandemic,the number of people flying domestically and internationally plummeted.By 202021,the aggregate number of passengers travelling though the 4 monitored airports was less than 28million.14ACCC|Airport monitoring report|202223Table 2.1:Extent of rebound in total passenger numbers,202223 versus previous financial year and before pandemicAirport202223Change since 202122(%)Change since 201819(%)Brisbane 20.2m96.4%-15.6%Melbourne30.8m138.1%-17.8%Perth14.2m93.1%-2.4%Sydney35.5m158.9%-22.2%Total100.7m127.4%-17.2%Source:ACCC analysis of information from the monitored airports.Sydney Airport reported the highest number of passengers of the monitored airports in 202223 with 35.5 million.Melbourne Airport reported 30.8 million passengers,followed by Brisbane Airport with 20.2 million and Perth Airport with 14.2 million.Figure 2.1 shows total(domestic and international)passenger numbers,separately for each monitored airport,for the 10 years to 202223.The chart shows that all airports reported significant recovery in passengers in 202223 following 2 years of very little activity due to the pandemic.However,the chart also shows that the number of people that flew to and from each airport in 202223 remains below levels recorded before the pandemic.In percentage and absolute terms,Perth Airport was the closest to returning to its pre-COVID-19 passenger numbers;and Sydney was the furthest from doing so.Figure 2.1:Total number of passengers(domestic and international),201213 to 20222305101520253035404550Total passengers(millions)202122202223201213201314201415201516201617201718201819201920202021Brisbane AirportMelbourne AirportPerth AirportSydney AirportSource:ACCC analysis of information from the monitored airports.15ACCC|Airport monitoring report|202223Domestic and international passenger numbersThe rate of recovery in passengers in 202223 for the monitored airports was very different for domestic and international flights.Most passengers travelling through the monitored airports fly on domestic flights.The 4 airports reported a total of 72.8 million domestic passengers in 202223,which represented an increase of 92%from the previous year.The strong growth reflected the first full year since the end of state border closures due to the pandemic,along with strong pent up demand for holidays and to visit family and friends.Limited international capacity at this time,which resulted in particularly high international airfares,also encouraged people to travel domestically.Despite the strong recovery in domestic passengers across the monitored airports,it was not sufficient to return to pre-pandemic levels.The number of domestic passengers across the airports was 10.4low that reported for 201819.The primary reason for this was constrained capacity.As flying rapidly began to return towards the very end of 202122,it became clear that the reduced workforces across the aviation sector were not yet able to effectively handle that level of activity.In response to the high rates of flight cancellations and delays,along with heightened levels of mishandled bags,the major domestic airlines chose to withhold capacity throughout 202223 at levels below full recovery.2Figure 2.2 below shows the number of domestic passengers using the airports for the years 201213 to 202223.Sydney Airport handled 23.3 million domestic passengers in 202223,followed closely by Melbourne Airport with 22.5 million.Figure 2.2:Domestic passenger numbers by airport,201213 to 202223051015202530202122202223201213201314201415201516201617201718201819201920202021Domestic passengers(millions)Brisbane AirportMelbourne AirportPerth AirportSydney AirportSource:ACCC analysis of information received from the monitored airports.Domestic passenger numbers increased for all 4 monitored airports from 202122 to 202223.However,domestic passenger numbers were still below 201819 levels for 3 of the 4 airports,with Perth Airport the exception.Perth Airport told the ACCC that this was primarily driven by a surge in passengers on regional flights within Western Australia,which in June 2023 were 39ove pre-COVID-19 levels.This reflected continued strong growth in the fly in,fly out resources sector.2 ACCC,Airline competition in Australia,December 2022,p 4,available at https:/www.accc.gov.au/about-us/publications/serial-publications/domestic-airline-competition-monitoring-reports/airline-competition-in-australia-december-2022-report.16ACCC|Airport monitoring report|202223With respect to international flights,the monitored airports combined handled 27.9million international passengers in 202223.The recovery in international travel has been slower than domestic travel.Fully vaccinated Australians were only allowed to travel overseas from November 2021,while the border was only opened to vaccinated foreign travellers from February 2021.All travel restrictions were lifted in July 2022,meaning non-vaccinated travellers could also travel to and from Australia.With the lifting of travel restrictions,international airlines began increasing capacity to and from Australia.The number of international passengers handled by the monitored airports increased by 337.2%in 202223 from a low absolute base in 202122.The 202223 result was still 31.0low 201819 totals.It was only in July 2022 that international travel restrictions were lifted,enabling non-vaccinated travellers to travel to and from Australia.The rate of recovery was held back to some degree by ongoing travel restrictions in China and Japan for much of 202223.Figure 2.3 shows international passenger numbers for each of the 4 monitored airports from 201213 to 202223.Sydney Airport handled 12.2 million international passengers in 202223,followed by Melbourne Airport with 8.3 million.Figure 2.3:International passenger numbers by airport,201213 to 202223051015202530202122202223201213201314201415201516201617201718201819201920202021Brisbane AirportMelbourne AirportPerth AirportSydney AirportInternational passengers(millions)Source:ACCC analysis of information received from the monitored airports.2.2 The Australian Government is reviewing policies for the aviation sectorThrough the Aviation White Paper process,the Australian Government has been consulting with stakeholders to develop its long-term policies for the aviation sector through to 2050.3 The government expects to release its Aviation White Paper in mid-2024.As part of this process,the government released an Aviation Green Paper in September 2023,seeking submissions.4 The green paper outlined various areas for future aviation policy reform,3 Department of Infrastructure,Transport,Regional Development,Communications and the Arts,https:/www.infrastructure.gov.au/infrastructure-transport-vehicles/aviation/aviation-white-paper,accessed March 2024.4 Department of Infrastructure,Transport,Regional Development,Communications and the Arts,https:/www.infrastructure.gov.au/infrastructure-transport-vehicles/aviation/aviation-green-paper,7 September 2023,accessed March 2024.17ACCC|Airport monitoring report|202223including on competition,consumer protections,maximising aviations contribution to net zero emissions and fit for purpose agencies and regulations.The ACCCs submission to the green paper5 discusses policy reforms to address airport market power,including providing access to arbitration to resolve any disputes between airports and airlines.The ACCC also supports greater requirements on airports to provide information to address the imbalance of power in commercial negotiations between airports and airlines.We also call for a review of the Aeronautical Pricing Principles,including to make them mandatory and enforceable.These principles,for airports and airport users,relate to prices,service delivery and the conduct of commercial negotiations.6The ACCCs submission called for the government to implement reforms to the Sydney Airport slot management scheme as soon as possible,to promote airline competition both at Sydney Airport and across the country.The Sydney Airport Demand Management Act 1997 sets the maximum movement limit for aircraft movements at Sydney Airport,of 80 take offs and landings per hour;and provides for the slot management scheme,under which slots for gate movements at Sydney Airport are allocated.Our reform suggestions include making competition an objective for the slot management scheme and providing greater transparency around slot allocation and usage.On 21 February 2024 the Australian Government announced reforms to the demand management arrangements.7 With regard to Sydney Airports supply of aeronautical services,the government stated it was not making any changes to existing arrangements for curfews on flights or,in effect,the total cap on daily aircraft movements.The reforms include changes to the movement cap to create a recovery period mode intended to reduce delays when there is severe weather or other major disruptions outside the control of the airlines or the airport.The recovery period would allow up to 85 planes to take off or land every hour for a maximum of 2 hours on the same day following the disruption,with no increase in the total amount of flights on that day.With regard to airline competition,the governments reforms include:Changing the definition of a new entrant,so that more airlines could be considered new entrants with advantaged access to available slots;and updating the allocation process for airlines wanting to change the times of slots to which they have pre-existing rights.Requiring the Sydney Airport Slot Manager to regularly publish information about how slots are issued to airlines and how airlines use them such as information about cancellations and delays.5 ACCC,https:/www.accc.gov.au/system/files/accc-submission-to-aviation-green-paper-nov-23.pdf,November 2023.6 Australian Government,Productivity Commission,Economic Regulation of Airports,Inquiry Report No 92,21 June 2019,p xv,https:/www.pc.gov.au/inquiries/completed/airports-2019/report/airports-2019.pdf,accessed March 2024;Australian Government Ministers Treasury Portfolio,https:/ministers.treasury.gov.au/ministers/peter-costello-1996/media-releases/productivity-commission-report-review-price-regulation,accessed March 2024.7 See Department of Infrastructure,Transport,Regional Development,Communications and the Arts,https:/www.infrastructure.gov.au/infrastructure-transport-vehicles/aviation/airports/reforms-sydney-airport-demand-management-framework,accessed March 2024.18ACCC|Airport monitoring report|2022232.3 Government considering ACCC advice on enhanced financial and quality reporting In May 2023 the ACCC responded to a request from the Australian Government for advice related to improving the framework for the monitoring of airports.We advised the government that:for the monitoring of financial performance,it should require the monitored airports to report to the ACCC systematically disaggregated data and detailed cost allocation methodologies,including that the airports disaggregate aeronautical financial statements by domestic and international passenger flights8for the monitoring of the quality of services and facilities,it should amend Schedule 2 of the Airports Regulations 1997(now in Part 5 of the Airports Regulations 2024)to provide for certain new and amended matters,such as time waiting in security queues and the operability and reliability of runways.9 The ACCC understands that our advice is being considered as part of the governments Aviation White Paper process.8 ACCC,https:/www.accc.gov.au/by-industry/travel-and-airports/airport-monitoring/more-detailed-information-on-financial-performance-of-airports/accc-final-advice-on-financial-information-may-2023,May 2023.9 ACCC,https:/www.accc.gov.au/by-industry/travel-and-airports/airport-monitoring/airports-quality-of-service-review/accc-final-advice-on-airport-quality-indicators,May 2023.19ACCC|Airport monitoring report|2022233.TotalairportfinancialperformanceKey pointsIn 202223,all 4 monitored airports reported higher total operating profits and operating profit margins than the previous year.Although aeronautical operations are the backbone of the airports operations,car parking provides the greatest operating margins.All 4 airports received a total quality of service rating of good,consistent with previous years.This chapter covers:the airports earnings for total operations:aeronautical,car parking,landside transport access and other commercial operationsa comparison of the contribution in revenue and operating profit margins in 202223 of segments of total airport operations,particularly aeronautical and car parking operationsinformation on ratings of the quality of the monitored airports services and facilities,based on surveys of passengers and airlines and objective data from the airports such as ratios of passengers to security screening equipment.The ACCC has also published supplementary information to this report,including the financial reports of the 4 airport operator companies,on our website,available via https:/www.accc.gov.au/about-us/publications/serial-publications/airport-monitoring-reports.As is the case in other parts of this report,we have adjusted historical dollar amounts in this chapter for inflation,presenting them in 202223 prices.3.1 Total airport revenue continued to increaseAs expected,on a total airport basis,all 4 monitored airports reported higher total airport revenues in 202223 than in 202122.Collectively,the airports reported revenue of$3,832million,up 60.9%.The biggest increases were recorded by the airports in states that had been the most impacted by long pandemic lockdowns.Sydney Airports total airport revenue rose by 65.5%to$1,374.9 million,the highest of the monitored airports(see figure 3.1 below).Melbourne Airport increased its revenues by the most in percentage terms:up 82.1%to$1,012.9 million.Brisbane Airport reported$825.2 million(up 54.0%)while Perth Airport reported$619.1 million(up 35.0%).20ACCC|Airport monitoring report|202223Figure 3.1:Total airport revenue in real terms,200708 to 202223202122202223201213201314201415201516201617200708200809200910201011201112201718201819201920202021Brisbane AirportMelbourne AirportPerth AirportSydney Airport02004006008001,0001,2001,4001,6001,8002,000Total airport revenue($millions)Source:ACCC analysis of information from the monitored airports.Despite this improvement year on year,all the airports except Perth Airport recorded total airport revenues in 202223 that were lower than 201819,the financial year before the COVID-19 pandemic.Perth Airports 202223 revenues were 8.9%higher than the financial year before the pandemic.Perth Airport advised that the increase in its revenue between 201819 and 202223 was driven by an additional$33.7 million from a balance sheet adjustment for the revaluation of non-aeronautical property and an additional$35 million in security revenue.Perth Airport further advised that the latter reflected its compliance with new security arrangements and represented a direct pass through of costs only,with the airport not profiting from this arrangement.Perth Airport noted that by excluding these 2 items,its revenue had decreased by 3.4%.3.2 Total airport earnings increased,with revenues increasing more than costsOne of the indicators that the ACCC uses to assess profitability of the monitored airports is earnings before interest,taxes and amortisation(EBITA).This is referred to in this report as operating profit or profit.10 On a total airport basis,all 4 monitored airports reported higher operating profits in 202223 than in 202122.Collectively,the airports reported operating profits of$1,763.2 million in 202223,up 248.6%.The biggest increases were recorded by Sydney and Melbourne airports(see figure 3.2 below and table 3.1 further below).Sydney Airport increased its total airport operating profit by 562.6%to$606.8 million,the highest of the monitored airports.Melbourne Airport increased its operating profit by almost 9 times to$443.4 million.Brisbane Airport reported an operating profit of$401.3million.10 For more information on the ACCCs use of EBITA as the profit measure for our airport monitoring,see Appendix A.21ACCC|Airport monitoring report|202223Figure 3.2:Total airport operating profit,by airport,200708 to 202223202122202223201213201314201415201516201617200708200809200910201011201112201718201819201920202021Brisbane AirportMelbourne AirportPerth AirportSydney Airport-20002004006008001,0001,200Total airport operating profit($millions)Source:ACCC analysis of information from the monitored airports.Real values(202223 dollars).Perth Airport was the only airport to record higher operating profits in 202223 than the financial year before the COVID-19 pandemic.Perth Airports 202223 operating profit of$311.8 million was 14.1%higher than 201819,but still not as high as it was in 201112.Perth Airport advised that the increase in its revenue between 201819 and 202223 was driven by an additional$33.7 million from a balance sheet adjustment for the revaluation of non-aeronautical property.Perth Airport noted that,excluding this revaluation,its operating profits increased in real terms by 1.7%.Another indicator that we use to assess profitability is operating profit margins,EBITA as a percentage of total revenue.This is referred to in this report as operating profit margin or profit margin.Figure 3.3 shows that in 202223,all 4 monitored airports reported total airport operating profit margins above 43%,with Perth Airport recording the highest margin,at 50.4%.Compared with 202122,Melbourne Airport reported the largest percentage increase in total airport operating profit margin,moving from 9.5%to 43.8%.22ACCC|Airport monitoring report|202223Figure 3.3:Total airport operating profit margin,200708 to 202223202122202223201213201314201415201516201617200708200809200910201011201112201718201819201920202021Brisbane AirportMelbourne AirportPerth AirportSydney Airport-40-20020406080Total airport operating profit margin(%)Source:ACCC analysis of information from the monitored airports.Table 3.1 below provides detailed amounts for the changes in total airport operating profit and profit margin over the past 3 years.It shows that Melbourne Airport has recorded the largest turnaround in total airport operating profit margin since 202122.Table 3.1:Total operating profit and profit margin in real terms,202021 to 202223AirportAirportprofit($million)Airportprofitmargin(%)202021202122202223202021202122202223Brisbane$53.8m$170.1m$401.3m10.81.8H.6%Melbourne($118.6m)$52.9m$443.3m(32.6%)9.5C.8%Perth$30.1m$191.2m$311.8m10.4A.7P.4%Sydney$166.0m$91.6m$606.8m18.8.0D.1%Source:ACCC analysis of information from the monitored airports.Real values(202223 dollars).3.3 Aeronautical operations are the mainstay of airports,but margins are higher in car parkingAirports typically earn most of their total airport revenue from aeronautical operations.These are the operations that directly relate to the provision of aviation services and facilities.They range from access to runways,aprons and parking for aircraft,to the use of departure lounges,equipment to handle bags and aerobridges connecting aircraft to terminals.Car parking and other commercial operations,such as shops in terminals or commercial property estates on airport land,also contribute material amounts of revenue.Fees from landside transport access charges on operators of ground transport options such as rideshare and taxis have constituted a relatively small but increasing source of revenue.As indicated in table 3.2 below,car parking operations provided higher operating profit margins than aeronautical operations for all 4 monitored airports in 202223.23ACCC|Airport monitoring report|202223Table 3.2:Contributions by business segments to total airport performance,by airportTotal airportAeronauticalCar parking LandsideOther(b)BrisbaneRevenue$825.2m$395.4m$123.9m$7.9m$298mOperating profit margin48.6(.8r.6%-(a)-MelbourneRevenue$1,012.9m$507.1m$160.9m$21.4m$323.5mOperating profit margin43.8.9f.0%-PerthRevenue$619.1m$276.8m$90.9m$5.9m$245.5mOperating profit margin50.44.6f.2%-SydneyRevenue$1,374.9m$829.9m$130.1m$21.5m$393.4mOperating profit margin44.1).1b.1%-Source:ACCC analysis of information from the monitored airports.Note:(a)Unable to calculate due to no granular expenses data.(b)Other includes activites such as commerical property and retail.The ACCC does not collect specific information about these activities from the monitored airports.3.4 All 4 airports recorded an overall quality of service rating as goodThe ACCC resumed collecting information on the quality of service provided by the airports in 202223 following its suspension during the pandemic.This section summarises the performance of the airports in relation to total quality of service and facilities.In summary,all 4 airports recorded an overall average rating of good for their quality of service in 202223.These results were mainly driven by passenger ratings(which contribute heavily to the overall rating),which have generally remained high.Ratings from airlines,were mixed,which has been a common theme over many years.In chapter 5 car parking and chapter 6 landside transport access,we provide some observations on information we have received about the quality of those services and facilities.MethodologyTo evaluate airports service quality,the ACCC collects both subjective and objective information on aircraft and passenger related services and facilities.Airport users,comprising airlines and passengers,are the principal sources for the ACCCs quality of service and facilities assessment survey data.The respondents of these surveys are asked to rate their level of satisfaction with airport services and facilities on a scale of 1 to 5.The average scores are then converted into 5 ratings ranging from very poor to excellent,as shown in table 3.3 below.24ACCC|Airport monitoring report|202223Table 3.3:Ratings of airports services and facilities11.491.52.492.53.493.54.494.55Very poorPoorSatisfactoryGoodExcellentSource:ACCC analysis of quality of service data.The ACCC also collects data from the airport operators on a wide range of objective indicators.An example of these indicators is the number of departing passengers per check in desk,kiosk and bag drop facility.Detailed data on the airports quality of service can be found in the supplementary information to this report on the ACCC website.Total airport quality of service and facilitiesFor each airport,the ACCC calculates a single overall quality of service and facilities rating.This overall rating covers aeronautical operations and,to a lesser degree,car parking and landside transport access operations.The overall rating represents the average score that the airport achieved across measures from the airline surveys,passenger surveys and objective indicators.The methodology for calculating this rating is explained in Appendix B.Figure 3.4 shows that all 4 monitored airports were rated as good for their overall quality of service and facilities.All 4 airports also received good ratings in 201718 and 201819,before the ACCC suspended full monitoring during the COVID-19 pandemic.In 201920,the ACCC did not collect results for the full set of quality measures,to reduce the burden on airlines and airports.In that year,all airports remained in the good range for passenger satisfaction.11Figure 3.4:Overall quality of service and facilities rating,200708 to 202223Average rating202122202223200708200809200910201011201112201213201314201415201516201617201718201819201920202021Brisbane AirportMelbourne AirportPerth AirportSydney AirportGoodExcellentPoorSatisfactoryVery poorBNE-3.84MEL-3.79PER-3.68SYD-3.67Source:ACCC analysis of information from the monitored airports and airlines.11 ACCC,Airport monitoring report 201920,p v.See https:/www.accc.gov.au/about-us/publications/serial-publications/airport-monitoring-reports/airport-monitoring-report-2019-20.25ACCC|Airport monitoring report|202223Quality of service and facilities ratings by passengersMonitored airports surveyed passengers about the quality of service and facilities provided by them with respect to passenger related aeronautical services,car parking and landside services.Passenger perception can be affected by service providers operating at the airports other than the airport itself,such as airlines,ground handling services and Australian Border Force.Figure 3.5 below shows the average passenger ratings of the quality of service and facilities for each monitored airport since 201011.Combining indicators,all 4 monitored airports were rated as good by passengers in 202223.Figure 3.5:Average passenger ratings of quality,201011 to 202223Average ratingGoodExcellentPoorSatisfactoryVery poor202122202223201011201112201213201314201415201516201617201718201819201920202021Brisbane AirportMelbourne AirportPerth AirportSydney AirportBNE-4.30MEL-4.05PER-3.78SYD-4.19Source:ACCC analysis of information from the monitored airports.Passenger ratings of the quality of service and facilities at the airports have been consistent since 201011,particularly when compared to airline ratings(discussed below).Except for Brisbane Airport receiving an excellent rating in 201516,all airports have received good ratings from passengers over the 201011 to 202223 period.Sydney Airport was consistently rated as having the lowest quality of service by passengers before COVID-19,but in 202223 received the second highest ranking among the 4 airports.Quality of service and facilities ratings by airlinesAirlines are also direct users of airport services and facilities and can provide a different perspective to passengers.They provide an informed view of the quality of the airports aeronautical infrastructure such as runways,taxiways and associated terminal infrastructure.Figure 3.6 below presents the average airline ratings on the quality of service and facilities for each monitored airport since 201011.The average rating has been calculated using airline survey responses with respect to aircraft and passenger related aeronautical services and airport management.Compared to passenger ratings,airline ratings have been much more volatile and generally lower since 201011,with the volatility partly due to the relatively small number of airline responses received.The ACCC received between 6 and 9 airline responses for each of the airports in 202223.In 202223 Brisbane Airport was the only airport that received an average rating of good by the airlines across the various measures.The other 3 airports which received an average rating of satisfactory.26ACCC|Airport monitoring report|202223Figure 3.6:Average airline ratings of quality of service and facilities,201011 to 202223Average ratingGoodExcellentPoorSatisfactoryVery poor202122202223201011201112201213201314201415201516201617201718201819201920202021Brisbane AirportMelbourne AirportPerth AirportSydney AirportMEL-3.10SYD-3.08BNE-3.76PER-3.28Source:ACCC analysis of information from our surveys of airlines.Overall,across the airports,some of the more common specific concerns raised by airlines related to baggage facilities,common user check-in facilities,aerobridges and public areas in terminals and public amenities,including washrooms.Airlines typically gave relatively higher average ratings for the standards of runways and taxiways.Brisbane Airport was the highest rated airport in 202223 and the only monitored airport to receive a good rating from airlines during the period.Some airlines considered that the airport had significantly improved its performance since 201819 and this is driven by the availability and capacity of its runways.Some airlines did,however,note that Brisbane Airport had ongoing issues with its standard of aerobridges,baggage handling equipment and cleanliness of terminals.The other 3 monitored airports were rated as satisfactory by airlines.Some airlines commented on the availability and capacity of Melbourne Airports runway assets in 202223,in the context that the airport conducted works on one runway during the period.Some airlines also raised concerns about,among other services and facilities,check in and baggage services and facilities.Perth Airport dropped from a good rating in 201819 to satisfactory in 202223.Some airlines noted concerns with aerobridges and availability and capacity of check in and baggage facilities.Additionally airlines noted issues of foreign object debris left on runways and taxiways,and the potential service disruption and safety hazards that can result.Regarding Sydney Airport,airlines most often raised concerns about the standard of check in services and facilities,followed by concerns about the availability and capacity of aircraft parking facilities and bays,ground handling services and facilities,aerobridges and the responsiveness of Sydney Airport management.Objective indicatorsBased on the objective indicators collected,the ACCC calculated the quality of all 4 airports services and facilities as good.This is the same rating achieved by the airports in 201819.For more results,see our database of supplementary information to this report,at https:/www.accc.gov.au/by-industry/travel-and-airports.27ACCC|Airport monitoring report|2022234.Aeronautical servicesKey pointsThe near recovery in passenger numbers from pre-COVID levels was reflected in growth in aeronautical revenue and operating profits year on year.The airports collectively earned$2.01 billion in aeronautical revenue over the year,up 91%from 202122.The monitored airports collectively made an operating profit of$567 million from aeronautical activities in 202223 after reporting a loss of$226 million the previous year.The airports aeronautical operating profit margins in 202223 trended towards pre-COVID-19 averages.The 202223 operating profit margins from highest to lowest were:Perth at 34.6%,Sydney at 29.1%,Brisbane at 28.8%,and Melbourne at 22.9%.Since 200708 Brisbane,Melbourne and Perth airports have at least doubled their aeronautical asset bases in real terms.The valuation of Sydney Airports aeronautical asset base has fallen marginally,but it still reports the largest aeronautical asset base,at$2.8 billion.This chapter reports financial information for the aeronautical operations of the monitored airports.Aeronautical operations are those that directly relate to the provision of aviation services,including runways,aprons,aerobridges,departure lounges and baggage handling equipment.12 We also include major investments in aeronautical assets the airports have reported to the ACCC.The ACCC has also published supplementary information to this report,including the financial reports of the 4 airport operator companies13,on our website,available at https:/www.accc.gov.au/about-us/publications/serial-publications/airport-monitoring-reports.As is the case throughout this report,we have adjusted historical dollar amounts in this chapter for inflation,presenting them in 202223 prices.4.1 Revenues from aeronautical operations were closer to pre-pandemic levelsBefore the pandemic,all 4 airports generated operating profits from aeronautical operations in every year over the lifespan of the airport monitoring regime and had maintained a steady aeronautical operating profit over those years.During the COVID-19 pandemic,in the context of handling far fewer passengers,all 4 monitored airports reported large reductions in aeronautical revenue and related operating losses on their aeronautical operations.The rebound in passenger numbers in 202223 translated to growth,year on year,in aeronautical revenues and aeronautical profit.12 Older historical financial results the ACCC reports are affected by how the monitored airports terminals have been operated over time.Some of the airports terminals were operated by the airport and some by airlines under a domestic terminal lease.For more information,see Appendix A.13 The entity that must report to the ACCC is the airport operator company.This may differ from the entity that typically published an annual report for the airport and financial amounts may differ.28ACCC|Airport monitoring report|202223Aeronautical revenue The airports collectively earned$2.01 billion in aeronautical revenue over the year,up 91%since 202122.Figure 4.1 shows aeronautical revenues in real terms since 200708.Three of the 4 monitored airports reported revenues from aeronautical operations in 202223 that were approaching but still below 201819 levels.Perth Airport was the exception,reporting higher aeronautical revenues in 202223 than in 201819.Figure 4.1:Aeronautical revenue,200708 to 202223202122202223201213201314201415201516201617200708200809200910201011201112201718201819201920202021Brisbane AirportMelbourne AirportPerth AirportSydney Airport02004006008001,0001,200Aeronautical revenue($million)Source:ACCC analysis of information from the monitored airports.As table 4.1 below details,in 202223 Melbourne Airport was back above$500 million in aeronautical revenues and back above 90%of its pre-COVID-19 aeronautical revenues.Brisbane and Sydney airports had both moved back to 80%or more of their pre-COVID-19 aeronautical revenue figures.Sydney Airport had not yet returned to recording annual aeronautical revenues above$1billion,a level it had exceeded in real terms in 201819($1.03 billion in 202223 dollars).A year-on-year comparison of aeronautical revenues from 202122 to 202223 shows a significant increase in revenues across all airports,with revenues almost doubling at all airports.Table 4.1:Comparison of aeronautical revenues,201819,202122 and 202223Airport201819 ($m)202122 ($m)202223 ($m)202223 as a percentage of 201819(%)Increase on 202122(%)Brisbane$463.1m$217.2m$395.4m 85.4.1%Melbourne$558.0m$256.0m$507.1m90.9.1%Perth$254.9m$154.4m$276.8m108.6y.2%Sydney$1033.5m$422.3m$829.9m80.3.5%Source:ACCC analysis of information from the monitored airports.Note:Real values(202223 dollars).29ACCC|Airport monitoring report|202223All airports reported stronger percentage growth in passengers than aeronautical revenues over the year,with Sydney and Melbourne reporting the largest difference.This reflects the stronger recovery in domestic activity over this time compared to international activity,as airports typically generate more revenue from each international passenger than they do for a domestic passenger.Passenger numbers also have grown faster than aeronautical revenues in 202223 as the airports were also able to continue to generate certain revenues(for example,runway charges)when aircraft were flying in 202122,despite fewer passengers on board.Aeronautical revenues per passengerSydney Airport reported the highest aeronautical revenue per passenger of the 4 airports in 202223 with$23.36.Brisbane Airport reported$19.57 in aeronautical revenue per passenger,followed by Perth Airport with$19.50 and Melbourne Airport with$16.47.Figure 4.2 below shows each airports aeronautical revenue per passenger in real terms(202223 dollars)since 200708.During the COVID-19 pandemic,all 4 monitored airports reported large reductions in aeronautical revenue,in the context of handling far fewer passengers.However,in some instances,aeronautical revenue declined proportionately less than the number of passengers.This was due to non-passenger revenue in the relevant period,(e.g.,freight,security,aircraft parking and other non-passenger related revenue sources)and an overall lower passenger base.This resulted in higher aeronautical revenue per passenger during the pandemic and a fall since.14 In figure 4.2 below,this is most evident for Sydney Airport.15 Figure 4.2:Aeronautical revenue per passenger,200708 to 202223202122202223201213201314201415201516201617200708200809200910201011201112201718201819201920202021Brisbane AirportMelbourne AirportPerth AirportSydney Airport0510152025303540Aeronautical revenue per passenger($)Source:ACCC analysis of information from the monitored airports.Over the longer term,all airports have reported increasing aeronautical revenue per passenger.Sydney Airports aeronautical revenue per passenger has been the highest among the 4 airports(approaching or above$20 in real terms),partly due to a higher proportion of its passengers flying internationally.However,Sydney Airports revenue per passenger has not risen in percentage terms as strongly as for the other 3 monitored airports.Brisbane Airports revenue per passenger in 202223 was 78%higher in real terms than 200708.14 For more information,see Appendix A.15 Year on year the falls were:Brisbane-7.3%,Melbourne-16.8%,Perth-7.2%,Sydney-24.1%.30ACCC|Airport monitoring report|202223Aeronautical expensesThe airports are also tending to record higher aeronautical total expenses in real terms.Figure 4.3 below shows each airports aeronautical expenses in real terms(202223 dollars)since 200708.All 4 monitored airports continued to incur material aeronautical expenses over the pandemic period,despite dampened passenger numbers.Figure 4.3:Aeronautical expenses,200708 to 202223202122202223201213201314201415201516201617200708200809200910201011201112201718201819201920202021Brisbane AirportMelbourne AirportPerth AirportSydney Airport0100200300400500600700Aeronautical expenses($million)Source:ACCC analysis of information from the monitored airports.On a per passenger basis,in 202223 Sydney Airport reported the highest aeronautical expenses per passenger at$16.57.Brisbane Airport reported$13.94 in expenses per passenger,followed by Perth Airport($12.76)and Melbourne Airport($12.69).The airports had been reporting increasing per passenger costs over time in the lead up to the pandemic.Aeronautical expenses per passenger(on a real basis)at the 4 airports in 201819 were between 25%(Sydney Airport)and 90%(Perth Airport)higher than in 200708.That is,while Sydney Airports aeronautical expenses per passenger since 200708 have typically been the highest among the 4 airports(approaching or above$10 in real terms for more years than the other airports)and were the highest immediately before the pandemic began,they have not risen in percentage terms since 200708 as strongly as for the other 3 monitored airports.31ACCC|Airport monitoring report|2022234.2 Airports reported first profits on aeronautical operations since 201920All 4 airports returned to making operating profits on their aeronautical activities in 202223 following the rebound in aeronautical activity.Operating profit is measured as earnings(revenue less cost)before interest,taxes and amortisation(EBITA).The airports had remained open during the COVID-19 collapse in passenger numbers and continued to incur some aeronautical expenses,without their usual level of accompanying aeronautical revenues.Then,as passengers returned,aeronautical revenues increased more than expenses;and operating profits were largely restored.As an example,from 202122 to 202223,Sydney Airport recorded a large rebound in aeronautical revenues from$422.3million in real terms to$829.9million.In comparison,Sydney Airports aeronautical expenses increased by$52.5 million in real terms over this period to$588.4 million.16 The monitored airports collectively made an operating profit of$567 million from aeronautical activities in 202223 after reporting a loss of$226 million the previous year.All airports posted their first aeronautical operating profits since 201920.Table 4.5 shows that Sydney Airport reported the highest operating profit from aeronautical activities in 202223 with$241.5 million,following a loss of$13.7 million the previous year.Melbourne Airport reported an aeronautical operating profit of$116.3 million in 202223($99.4 million loss the previous year),followed by Brisbane Airport with$113.8 million($12.9million loss the previous year)and Perth Airport with$95.7 million($0.1 million loss the previous year).Table 4.5:Aeronautical operating revenues,costs and operating profit margins,202223AirportAeronautical revenue($m)Aeronautical costs($m)Aeronautical operatingprofit(EBITA)($m)Aeronautical operatingprofit(EBITA)margin (%)Brisbane$395.4m$281.5m$113.8m28.8%Melbourne$507.1m$390.8m$116.3m22.9%Perth$276.8m$181.1m$95.7m34.6%Sydney$829.9m$588.4m$241.5m29.1%Source:ACCC analysis of information from the monitored airports.Sydney Airport reported the highest aeronautical operating profit per passenger with$6.80.Perth Airport reported an aeronautical operating profit of$6.74 per passenger,followed by Brisbane with$5.64 and Melbourne with$3.78.Figure 4.4 shows that Sydney Airport had been reporting the highest operating profit per passenger prior to the pandemic.16 On a line in the sand basis,excluding landfill.For more information about the line in the sand approach,please see Appendix A.32ACCC|Airport monitoring report|202223Figure 4.4:Aeronautical operating profit per passenger,200708 to 202223202122202223201213201314201415201516201617200708200809200910201011201112201718201819201920202021Brisbane AirportMelbourne AirportPerth AirportSydney Airport-32-28-24-20-16-12-8-404812Aeronautical operating profit per passenger($)Source:ACCC analysis of information from the monitored airports.Figure 4.5 below shows that the aeronautical operating profit margins had been quite stable for all 4 airports since 200708 until 201920.All 4 monitored airports recorded negative aeronautical profit margins during the pandemic.These margins returned to being positive in 202223,however they have not returned to pre-pandemic levels.Figure 4.5:Aeronautical operating profit margins,200708 to 202223202122202223201213201314201415201516201617200708200809200910201011201112201718201819201920202021Brisbane AirportMelbourne AirportPerth AirportSydney Airport-150-125-100-75-50-250255075Aeronautical operating profit margin(%)Source:ACCC analysis of information from the monitored airports.Perth Airport reported the highest aeronautical operating profit margin in 202223 with 34.6%(compared with 34.2%in 201819).This was followed by Sydney at 29.1%(45.1%in 201819),Brisbane at 28.8%(46.9%in 201819)and Melbourne at 22.9%(40.1%in 201819).33ACCC|Airport monitoring report|2022234.3 All airports reported positive returns on their aeronautical assetsFor 202223 all 4 monitored airports reported a recovery to positive returns on aeronautical assets,based on operating profit(EBITA)as a percentage of average tangible non-current aeronautical assets.17 Perth Airport reported the highest return with 9.5%,followed by Sydney(8.1%),Melbourne(4.3%)and Brisbane(4.0%).For 3 of the airports,return on aeronautical assets remained below both their 201819 levels and their average pre-pandemic return.Perth Airports return on aeronautical assets in 202223 of 9.5%was above both its return in 201819(7.6%)and its average pre-pandemic return.Figure 4.6 shows returns on aeronautical assets since 200708.It shows that the returns on aeronautical assets in 202223 for the monitored airports were tracking back towards their averages recorded from 200708 to 201819(pre-COVID-19)from the negative returns recorded during the COVID-19 pandemic.Figure 4.6:Return on aeronautical assets,200708 to 202223Brisbane AirportMelbourne AirportPerth AirportSydney Airport-10-505101520Return on aeronautical assets(%)202122202223201213201314201415201516201617200708200809200910201011201112201718201819201920202021Source:ACCC analysis of information from the monitored airports.Brisbane Airports average return on aeronautical assets from 200708 to 201819 was 7.8%,Sydney Airports was 10.6%,Melbourne Airports was 10.9%and Perth Airports was 11.5%.4.4 Airports starting to resume aeronautical investmentsThe ACCC considers that an important determinant of an airports operational performance is the extent to which is it undertaking prudent and efficient investments in aeronautical infrastructure to meet the current and future needs of users.1817 This includes applying a 200708 line in the sand on aeronautical assets for 2 airports that have revalued them.For more information on the inputs to these calculations,see Appendix A.18 For further comments on appropriate investment,see Appendix D.34ACCC|Airport monitoring report|202223The levels of investments in aeronautical assets for all 4 airports pre-pandemic(201819)and the first year of the pandemic(201920)were,in aggregate,$1.43 billion and$918million,respectively.During the pandemic the airports were relatively conservative with investments and reduced or delayed projects where possible.In 202223 the airports retained a modest investment program,investing$559 million in aeronautical operations.This represented an increase of 37%compared to the previous year,and 5.9%of the airports combined aeronautical asset base.Melbourne Airport contributed 62%of the 202223 investment in aeronautical operations by the monitored airports.Aeronautical asset valuesSince 200708 Brisbane,Melbourne and Perth airports have at least doubled their aeronautical asset bases(valuations of tangible non-current aeronautical assets,in real terms).The valuation of Sydney Airports aeronautical asset base has fallen marginally in real terms,but it still reports the largest aeronautical asset base.Figure 4.7 below shows each airports tangible non-current aeronautical asset values from 200708 to 202223.These values reflect past investments by the airport in assets used for aeronautical purposes,such as runways,taxiways,parking bays,aprons and terminal facilities.Sydney Airport reported the highest asset value in 202223 with$2.79 billion19,followed by Melbourne Airport($2.72 billion),Brisbane($2.69 billion)and Perth($0.97 billion).Figure 4.7:Tangible non-current aeronautical asset bases,200708 to 202223Brisbane AirportMelbourne AirportPerth AirportSydney Airport2021222022232012132013142014152015162016172007082008092009102010112011122017182018192019202020210.00.51.01.52.02.53.03.54.04.5Aeronautical asset base($billions)Source:ACCC analysis of information from the monitored airports.As airports have,for instance,invested in terminal infrastructure and,in Brisbane Airports case,added a runway,the tangible non-current aeronautical assets have increased since 200708 for Brisbane Airport,Melbourne Airport and Perth Airport by 116%,214%and 222%respectively.Sydney Airport,however,reported a reduction of 18%in real terms in its overall tangible non-current aeronautical assets since 200708.Melbourne Airport,Brisbane Airport and Sydney Airport have experienced some fluctuations in their tangible non-current aeronautical assets,whereas Perth Airport has experienced a flatter growth.19 Line in the sand excluding landfill.35ACCC|Airport monitoring report|202223Aeronautical investmentFigure 4.8 below looks at the real dollar value of the additions(investments)made by the 4 airports from 200708 to 202223.Investments by Brisbane Airport,Melbourne Airport and Sydney Airport have been quite lumpy and fluctuated over time.Sydney Airport had a spike in aeronautical investment in 201516,with a large proportion of this increase relating to the purchase of the Qantas domestic terminal lease.Perth Airports investments,however,have been steadier,with increases from 201011 to 201516 and then a decrease to a more stable amount of investment.In 202223,Melbourne Airport reported the highest level of investment since 201819 with$347.9 million.This reflected the airports completed projects and projects underway such as work on roads,runway overlays,taxiways and terminals,including the replacement of passenger screening equipment.Figure 4.8:Gross investments in tangible non-current aeronautical assets,200708 to 202223Brisbane AirportMelbourne AirportPerth AirportSydney Airport20212220222320121320131420141520151620161720070820080920091020101120111220171820181920192020202101002003004005006007008009001,000Gross investments in aeronautical assets ($millions)Source:ACCC analysis of information from the monitored airports.As noted in our 202122 monitoring report,the 4 airports reported relatively conservative investment programs during the pandemic.20 The reported dollar values of completed aeronautical investments in 202223 were mixed compared to 202122,however,they were lower than 201819.In 202223,Brisbane Airport reported completed major aeronautical investments of$36.7million,such as its international terminal building apron/taxilane replacement project.In 202122,the amount of major aeronautical investments was only$2 million.In comparison,in 201819,before COVID-19,Brisbane Airport was in the course of constructing its new parallel runway,valued at that time at$1.1 billion,with supporting projects such as a new road and underpass,valued at that time at$115 million.Melbourne Airport reported completed major investments in aeronautical facilities in 202223 of$55 million,such as stage one of its Terminal 3 redevelopment project.Sydney Airport reported amounts totalling between$32.2 million to$77.2 million.This included upgrades to passenger screening in Terminal 3 valued between$15 million to$20 million.This was broadly in line with the amounts reported for the previous financial year(values totalling up to$86 million).Perth Airports terminal security screening reform project,valued at$70.5 million,straddled the reporting periods for major investments completed and underway.20 ACCC,Airport monitoring report 202122,August 2022,p 68.36ACCC|Airport monitoring report|202223The airports reported major investments underway in 202223 with the following total values:Brisbane Airport$506.4 million,including passenger and checked bag screening and capacity upgrades,valued at$495.5 million.Melbourne$4.5 billion,including a value of$2.2 billion for the Melbourne Airport 3rd Runway(Melbourne Airport submitted its plan for this runway to the Australian Government in February 2023).21Sydney Airport reported between$609 million and$860 million,including for the check in and security hall redevelopment project,valued at between$150 million to$200 million.Perth Airport reported$71 million in investments underway,including an increase to apron parking capacity at Terminal 2.Appendix D provides greater detail about the airports major investments.Figure 4.9 below shows the additions(investment)in tangible non-current aeronautical assets as a percentage of tangible non-current aeronautical assets.This figure shows that Perth Airport reported a higher rate of investment from 200809 to 201516.Perth Airport reached a peak of 45%in 201213.During that year,Perth Airport completed several investments,with the largest being construction of T2 and associated infrastructure.T2 was designed to primarily service regional routes,as well as some interstate services.Figure 4.9:Additions in aeronautical assets as a percentage of those assets,200708 to 202223Brisbane AirportMelbourne AirportPerth AirportSydney Airport202122202223201213201314201415201516201617200708200809200910201011201112201718201819201920202021Additions in aeronautical assets(%)0510152025303540Source:ACCC analysis of information from the monitored airports.21 Melbourne Airport,Melbourne Airport international passenger numbers hit record February high,accessed March 2024.37ACCC|Airport monitoring report|202223Melbourne Airport has experienced 3 peak periods of investment in 200809,201415 and 201819.In 200809,the investment coincided with Melbourne Airports international terminal expansion.22 In 201415,Melbourne Airport continued its T4 construction.23 In 201819 a large majority of the investment Melbourne Airport recorded was the result of the expiry of the T1 domestic terminal lease with Qantas and the inclusion of T1 into the asset base.24 For Brisbane Airport,200708 and 201415 were the years with peak investments.In 201415,Brisbane Airport continued with its new parallel runway construction.25 As noted above,Sydney Airport had a spike in aeronautical investment in 201516,with a large proportion of this increase relating to the purchase of the Qantas domestic terminal.26During the pandemic,airports at times reported a relatively smaller rate of incremental additions to their aeronautical asset bases.For example,in the years 200708 to 201819,before the COVID-19 pandemic,Brisbanes annual additions in its aeronautical assets as a percentage increase on those assets ranged from 6.4%(201011)to 33.0%(200708),while in the 202021 and 202122 financial years the percentage increase was 0.8%and 2.0%respectively.Melbournes additions in 201415 represented 30.4%of its aeronautical asset values,compared with additions in 202021 amounting to 5.1%.By 202223,Melbourne had increased its level of additions back up to 12.9%.22 ACCC,Airport Monitoring Report 200809,March 2010,p 161.23 ACCC,Airport Monitoring Report 201415,March 2016,p 77.24 ACCC,Airport Monitoring Report 201819,February 2020,p 84.25 ACCC,Airport Monitoring Report 201415,March 2016,p 49.26 ACCC,Airport Monitoring Report 201516,March 2017,p 139.38ACCC|Airport monitoring report|2022235.Car parkingKey pointsThe number of vehicles that used airport car parks in 202223 was higher than the previous financial year for all the monitored airports as the airports continued to rebound from COVID-19.Car parking operating profits increased significantly in 202223.The 4 airports collectively earned$337 million in operating profits from car parking activities(up 168%since 202122 and 6%since 201819,both in real terms).Sydney Airports car parking operating profits increased fourfold in 202223 to$80.8 million but remained 23low 201819 levels.Three out 4 of the airports reported higher car parking operating profit margins in 202223 compared to 201819(pre-COVID-19 levels).The exception was Sydney.Brisbane reported the highest operating profit margin(earnings before interest,taxes and amortisation as a proportion of revenue)of the monitored airports in 202223 with 72.6%,ahead of Perth(66.2%),Melbourne(66.0%),and Sydney(62.1%).The 4 monitored airports provide a range of onsite car parking facilities for the public and staff.Airports hold market power with respect to car parking because in most cases they are the sole provider of these services on airport land,especially in relation to at-terminal parking.However,the extent of this market power will depend on the degree to which consumers needs(for example,convenience and cost)can be met by alternative transport modes or an independent car park operator located near the airport.This chapter presents an overview of the monitored airports results with respect to car parking operations,including operational and financial performance,short-term and long-term car parking prices and major car parking investments.As for other parts of this report,all dollar amounts in this chapter have been adjusted for inflation and are presented in 202223 prices.The ACCC has also published supplementary information to this report on car parking on our website,available at https:/www.accc.gov.au/about-us/publications/serial-publications/airport-monitoring-reports.5.1 Car parking throughput increased as passenger numbers roseUse of the monitored airports car parks is naturally correlated to the number of passengers travelling,as most people who attend an airport do so for travel.The number of people flying,and accordingly the use of airport car parking,increased significantly from 202122 to 202223.However,the monitored airports were largely still handling fewer passengers than before COVID-19.Figure 5.1 below shows daily average vehicle throughput for each of the monitored airports for 200910 to 202223.Sydney Airport reported the highest average daily throughput of 8,568 vehicles per day in 202223.Melbourne Airport reported 7,432 vehicles,followed by Brisbane Airport with 6,962 and Perth Airport with 4,622.Throughput more than doubled in 202223 for Melbourne,Perth and Sydney airports.Brisbane Airport experienced a 78%increase in throughput.39ACCC|Airport monitoring report|202223Figure 5.1:Daily average vehicle throughput by airport,200910 to 20222302,0004,0006,0008,00010,00012,000201213201415201819201920202021202122202223Daily average vehicle throughput 201617201718201516201314201112201011 20091014,000Brisbane AirportMelbourne AirportPerth AirportSydney AirportSource:ACCC analysis of information from the monitored airports.The degree of recovery since the COVID-19 pandemic varied among the airports:Sydney Airports daily average throughput of vehicles in 202223 was 23.4%lower than 201819,Melbourne Airports was 14.8%lower and Brisbane Airports was 7.0%lower.Perth Airports daily average throughput in 202223 similar to its throughput in 201819(less than 1%lower).Vehicle throughput has recovered at a faster rate than passenger numbers for Melbourne,Brisbane and Perth airports.Airports have indicated that people are increasingly choosing to use car parking over other transport modes since COVID-19.5.2 Car parking revenue grew strongly at all airportsCar parking revenue is determined by car parking throughput and prices.Further,as motorists generally pay more for long-term parking than for short-term parking,revenue is also affected by the distribution of throughput across these 2 forms of parking.Table 5.1 below shows car parking revenue in the period 201819 to 202223.In 202223 Melbourne Airport had the highest car parking revenue with$160.9 million,followed by Sydney Airport($130.1 million),Brisbane Airport($123.9 million)and then Perth Airport($90.9 million).All airports reported significant increases in car parking revenue in 202223 due to the strong growth in vehicle throughput.40ACCC|Airport monitoring report|202223Table 5.1:Car parking revenue,by airport,201819 to 202223201819($m)201920($m)202021($m)202122($m)202223($m)Change since 201819(%)Change since 202122(%)Brisbane$123.2m$94.5m$49.7m$68.5m$123.9m0.6.9%Melbourne$167.5m$123.8m$41.5m$81.4m$160.9m-3.9.7%Perth$71.1m$56.5m$38.8m$57.6m$90.9m 27.8W.8%Sydney$153.8m$115.1m$37.4m$60.3m$130.1m-15.45.8%Source:ACCC analysis of information from the monitored airports.For Brisbane and Perth airports,car parking revenue for 202223 was above 201819 levels,albeit only slightly for Brisbane Airport.All airports reported stronger recovery in car parking revenue than in vehicle throughput,which suggests that motorists are paying more on average.Factors can include price changes,length of stay and/or choice of parking product.Perth Airport advised that car parking revenue had increased due to a change in the mix of hourly and overnight car parking.5.3 Car parking operating expenses back to pre-pandemic levels for Perth and SydneyAs demand for car parking increased in 202223,operating expenses increased for all 4 of the monitored airports.Melbourne Airport had the highest operating expenses in 202223 with$54.7 million.This was followed by Sydney Airport($49.4 million),Brisbane Airport($34.0 million)and Perth Airport($30.8million).Table 5.2 below shows car parking operating expenses across the monitored airports in the period 201819 to 202223.Table 5.2:Car parking operating expenses,by airport,201819 to 202223201819($m)201920($m)202021($m)202122($m)202223($m)Change since 201819 (%)Change since 202122 (%)Brisbane$40.4m$37.3m$21.2m$28.8m$34.0m-15.8.1%Melbourne$78.2m$63.7m$51.3m$48.8m$54.7m-30.1.1%Perth$30.1m$26.5m$21.8m$24.2m$30.8m2.3.3%Sydney$49.1m$46.4m$32.0m$40.2m$49.4m0.6.9%Source:ACCC analysis of information from the monitored airports.Year-on-year increases ranged from 12.1%at Melbourne Airport to 27.3%at Perth Airport.However,the increases in car parking expenses during the year were smaller than the growth in vehicle throughput.This is in the context that many costs for car parking are fixed and therefore continued to be incurred when vehicle throughput was lower due to the pandemic.41ACCC|Airport monitoring report|202223As a comparison with operations before the COVID-19 pandemic,car parking operating expenses across Brisbane and Melbourne airports were lower in 202223 than 201819,while operating expenses for Perth and Sydney airports in 202223 were back to 201819 levels.5.4 Car parking operating profits and margins were above pre-COVID levels at most airportsCar parking operating profits(EBITA)increased significantly for all 4 monitored airports in 202223 on the back of strong revenue growth.The 4 airports collectively earned$337million in operating profits from car parking activities(up 168%since 202122 and 6%since 201819,both in real terms).Three out of the 4 monitored airports car parking operating profits were above 201819(pre-COVID-19)levels.The exception was Sydney Airport.Sydney Airports operating profit increased fourfold from 202122 to 202223,to$80.8 million,but remained 23low 201819 levels.Figure 5.2 below presents trajectories of car parking operating profits across the monitored airports over the period from 200405 to 202223.In 202223,Melbourne Airport increased its operating profit by 225.7%year-on-year to$106.2 million,which is the airports highest result in inflation-adjusted terms since 201415.This is due to the airports expenses remaining significantly below pre-pandemic levels while revenues recovered on the back of strong vehicle throughput.Figure 5.2:Car parking operating profit(EBITA),by airport,200405 to 202223-50-2502550751001252004 052005 06 2006 07 2007 082008 09 2009 10 2010 11 2011 12 2012 13 2013 14 2014 152015 16 2016 17 2017 18 2018 19 2019 20 2020 21 2021 22 2022 23Car parking operating profit($)Brisbane AirportMelbourne AirportPerth AirportSydney AirportSource:ACCC analysis of information from the monitored airports.Note:Real values(202223 dollars).Brisbane Airport reported an operating profit of$89.9 million from car parking activities in 202223,up 126.5%on the previous year.Sydney Airport reported the biggest percentage increase with growth of 301.1%($80.8 million),while Perth Airport reported an operating profit of$60.1 million(up 80.1%).42ACCC|Airport monitoring report|202223Car parking marginsFigure 5.3 below shows the changes in car parking operating profit margins for each of the monitored airports from 200405.Brisbane Airport reported the highest car parking operating profit margin in 202223 with 72.6%,ahead of Perth Airport(66.2%),Melbourne Airport(66.0%)and Sydney Airport(62.1%).Additionally,Melbourne,Perth and Brisbane airports reported higher car parking operating profit margins in 202223 than 201819.Brisbane Airport reported the highest profit margin of any airport since 201516 in inflation-adjusted terms(202223 prices).Figure 5.3:Car parking operating profit margin,by airport,200405 to 202223-3003060902004 05 2005 06 2006 07 2007 08 2008 09 2009 10 2010 11 2011 12 2012 13 2013 14 2014 15 2015 16 2016 17 2017 182018 19 2019 20 2020 212021 22 2022 23Car parking operating profit margin(%)Brisbane AirportMelbourne AirportPerth AirportSydney AirportSource:ACCC analysis of information from the monitored airports.Tables 5.3 to 5.5 below show the detail of various car parking metrics for each of the monitored airports,including operating profit margins 201819 to 202223.Table 5.3:Key car parking indicators for 202223AirportCar parking revenue($m)Car parking operating profit($m)Car parking profitmargin(%)Car parking spacesCar parking revenue per car park space($)Operating profitpercar park space($)Revenue share of total airport revenue(%)Brisbane$123.9m$89.9m72.6,961-15.0%Melbourne$160.9m$106.2m66.0&,654$6,038$3,98515.9%Perth$90.9m$60.1m66.2,689$4,006$2,65014.7%Sydney$130.1m$80.8m62.1,074$8,632$5,3579.5%Source:ACCC analysis of information from the monitored airports.Note:Brisbane Airport has claimed confidentiality over car parking revenue per car park space and operating profit per car park space.43ACCC|Airport monitoring report|202223Table 5.4:Changes in key car parking indicators from 202122 to 202223AirportCar parking revenue(%change)Operating profit(%change)Profitmargin(percentage point change)Car parking spaces(%change)Revenue per car park space(%change)Operatingprofitper car park space(%change)Brisbane81.06.5.6pp0.0%-Melbourne97.75.7%.9pp0.0.75.7%Perth57.9.1%8.2pp17.24.7S.6%Sydney115.801.1(.7pp27.6i.1!4.2%Source:ACCC analysis of information from the monitored airports.Note:Brisbane Airport has claimed confidentiality over revenue per car park space(%change)and operating profit per car park space(%change).Table 5.5:Car parking operating profit(EBITA)margin,by airport,201819 to 202223Airport201819(%)201920(%)202021(%)202122(%)202223(%)Change since 201819(percentage points pp)Change since 202122(pp)Brisbane67.2.5W.3X.0r.6%5.4pp14.6ppMelbourne53.3H.5%-23.5.1f.0.7pp25.9ppPerth57.6S.1C.9X.0f.2%8.6pp8.2ppSydney68.1Y.7.53.4b.1%6.0pp28.7ppSource:ACCC analysis of information from the monitored airports.5.5 Car parking pricesThis section summarises information on various short-term and long-term car parking prices.Individual car parking prices at the monitored airports are determined by factors including the length of stay,how close the car park is to the terminal,whether the car park is covered or open,whether the parking is booked in advance and customer demand.All monitored airports effectively offer a form of at-terminal parking,often used for shorter stays,and at-distance parking,typically involving a bus ride to the terminals and often used for longer stays.They may also offer a range of products and services that are variations on that basic split.In summary,the price to park a car at the monitored airports,both short-term and long-term,fell in real terms in 202223.As shown in the tables 5.6 and 5.7 below,some short-term and long-term car parking prices at monitored locations had a real price reduction of 6.6%from 2022 to 2023.This reflects a price change due to inflation and that prices in nominal terms have remained steady.Short-term car parking The ACCC considers short-term parking to be parking for a period of up to a day at a car park located at the terminal,with the motorist often paying drive up rates(as opposed to online rates).44ACCC|Airport monitoring report|202223Table 5.6 below shows short-term at-terminal drive up parking prices for selected durations for each of the monitored airports over the past 5 years.27 28 It indicates that prices have reduced by a maximum of 8.2%in real terms since 202122,across the time periods and across the airports.In the case of Melbourne Airport,the reductions were uniform in percentage terms across the time periods,while other airports recorded varying reductions in percentage terms.Sydney and Brisbane airports were the most expensive for 30 to 60 minute parking at the terminal,while Melbourne Airport was the cheapest.For those parking at the terminal for up to 24 hours,Sydney Airport was the most expensive and Melbourne Airport was the cheapest.Table 5.6:Short-term at-terminal drive up car parking prices,by airport,between 30 June 2019 and 30 June 202330 June 2019($)28 March 2020($)30 June 2021($)30 June 2022($)30 June 2023($)Change since 30 June 2019(%)Change since 30 June 2022(%)Brisbane3060 minutes$20.72$21.58$21.24$21.41$21.001.3%-1.9%1 to 2 hours$25.33$26.13$25.71$26.76$26.002.7%-2.8%2 to 3 hours$31.08$31.81$31.30$32.11$31.00-0.3%-3.5%3 to 4 hours$32.23$32.94$32.42$33.18$32.00-0.7%-3.6%Up to 24 hours$64.46$64.75$63.72$63.15$63.00-2.3%-0.2%Melbourne3060 minutes$13.81$17.04$16.77$16.05$15.008.6%-6.6%1 to 2 hours$27.63$32.94$33.54$32.11$30.008.6%-6.6%2 to 3 hours$27.63$32.94$50.30$48.16$45.0062.9%-6.6%3 to 4 hours$39.14$44.30$54.77$52.44$49.0025.2%-6.6%Up to 24 hours$58.71$57.93$54.77$52.44$49.00-16.5%-6.6%Perth292 to 3 hours$26.48$26.58$26.83$26.54$24.80-6.3%-6.6%3 to 4 hours$28.78$28.85$28.62$28.25$26.40-8.3%-6.6%8 to 24 hours$56.41$57.93$60.81$60.58$56.600.3%-6.6%SydneyUp to 30 minutes$11.17$11.25$11.07$10.60$10.60-5.1%0.0060 minutes$22.33$22.61$22.25$21.30$21.20-5.1%-0.5%1 to 2 hours$31.66$31.69$31.19$32.00$31.900.8%-0.3%2 to 3 hours$42.59$43.05$42.37$42.70$39.90-6.3%-6.6%3 to 24 hours$71.37$72.59$71.43$70.53$69.90-2.1%-0.9%Source:ACCC analysis of information from the monitored airports.Notes:As some airports offered free parking from late-March 2020 in response to the COVID-19 pandemic,the ACCC asked all 4 monitored airports to report 2020 car parking prices as at 28 March 2020,rather than 30 June 2020.Real values(202223 dollars).27 As some airports offered free parking from late-March 2020 in response to the COVID-19 pandemic,the ACCC asked all 4 monitored airports to report 2020 car parking prices as at 28 March 2020,rather than 30 June 2020.28 Melbourne Airport made substantial changes to its pricing schemes in both 201920 and 202021,which accounts for the large variations in pricing compared with the preceding years.For example,Melbourne Airport restructured its parking offerings at its multi-level T123 car park in 202021,which led to significant price rises in the 2 to 3 and 3 to 4 hour price points.29 We do not have comparable data and a consistent time series for Perth Airport for 30 to 60 minutes and 1 to 2 hours.45ACCC|Airport monitoring report|202223Long-term car parkingThe ACCC considers long-term parking to be parking for a period of one day or more at a car park located at a distance from the terminal,where motorists may pay drive up rates or book online.Table 5.7 shows long-term at-distance drive up parking rates for selected durations at the monitored airports between 30 June 2019 and 30 June 2023.It indicates that prices have reduced for Brisbane,Melbourne and Perth airports for all price points from 2019 to 2023 in the table below.From 2019 to 2023,the reduction in prices for Melbourne Airport were significant ranging from 26.3%to 57.5%.The reduction in prices for this period for Brisbane and Perth airports were not as large ranging from 0.3%to 11.4%.For Sydney Airport,2 price points reduced and 2 price points increased from 2019 to 2023.Prices further reduced from 2022 to 2023 for Brisbane,Melbourne and Perth airports,however these reductions were not as pronounced as the reduction from 2019 to 2023.For Sydney Airport all price points in the table below reduced from 2022 to 2023.Table 5.7:Long-term at-distance drive up parking prices,by airport,between 30 June 2019 and 30 June 202330 June 2019($)28 March 2020($)30 June 2021($)30 June 2022($)30 June 2023($)Change 30 June 2019 to 30 June 2023(%)Change 30 June 2022 to 30 June 2023(%)Brisbane1 to 2 days$46.05$47.71$46.95$44.95$42.00-8.8%-6.6%2 to 3 days$67.92$69.29$68.19$65.29$61.00-10.2%-6.6.%4 to 5 days$97.85$98.83$97.25$93.11$87.00-11.1%-6.6%6 to 7 days$113.96$114.73$112.90$108.10$101.00-11.4%-6.6%Melbourne1 to 2 days$56.41$55.66$26.83$25.69$24.00-57.50%-6.6%2 to 3 days$79.43$78.38$40.24$38.53$36.00-54.7%-6.6%4 to 5 days$90.94$89.74$67.07$64.22$60.00-34.0%-6.6%6 to 7 days$113.96$112.46$93.90$89.90$84.00-26.3%-6.6%Perth1 to 2 days$62.16$63.61$66.62$66.36$62.00-0.3%-6.6%2 to 3 days$92.67$94.29$98.82$98.46$92.00-0.7%-6.6%4 to 5 days$119.72$121.55$126.32$125.22$117.00-2.3%-6.6%6 to 7 days$147.35$147.68$153.82$151.98$142.00-3.6%-6.6%8 days$160.01$160.17$166.56$163.75$153.00-4.4%-6.6 days$248.65$244.23$249.28$244.02$228.00-8.3%-6.6%Sydney1 to 2 days$74.82$73.84$72.66$69.46$68.90-7.9%-0.8%2 to 3 days$89.79$102.24$100.61$98.36$96.907.9%-1.5%4 to 5 days$125.48$135.18$133.02$130.47$128.702.6%-1.4FACCC|Airport monitoring report|20222330 June 2019($)28 March 2020($)30 June 2021($)30 June 2022($)30 June 2023($)Change 30 June 2019 to 30 June 2023(%)Change 30 June 2022 to 30 June 2023(%)6 to 7 days$162.31$178.35$175.50$162.57$160.50-1.1%-1.3%Source:ACCC analysis of information from the monitored airports.Notes:As some airports offered free parking from late-March 2020 in response to the COVID-19 pandemic,the ACCC asked all 4 monitored airports to report car parking prices as at 28 March 2020,rather than 30 June 2020.Real values(202223 dollars).5.6 Investment in carparking facilities The monitored airports provided lists of car parking investments to the ACCC.The monitored airports provide information for major car parking investments completed in the reporting period,underway in the reporting period and planned as of the reporting period.For detailed lists of the major car parking investments,see Appendix D.Below is a summary of some key car parking investments for each of the monitored airports.Brisbane Airport Brisbane Airport reported that its International car park and access solution,which it valued at$126 million,would provide more car parking bays and road infrastructure.Brisbane Airport reported it was due to complete the project by the end of 2026.Brisbane Airport also reported that it was continuing work on its Domestic terminal multi-level car park(MLCP)2 Extension project,with an estimated value of$90 million and due for completion by the end of 2025.In the longer term,Brisbane Airport reported that it is planning to spend an estimated$330 million on its Domestic Multi Level Car Park 3,with project start and end dates to be confirmed.Melbourne AirportMelbourne Airport reported 5 planned major car parking investment projects,ranging from the Value Carpark Expansion(Grassy Knoll Stage 2)project,projected to start in 202324,to the T4 car park expansion,projected to be finished in 203637.These future investments primarily focus on increasing car parking capacity for Melbourne Airport.Perth AirportPerth Airport noted its T1T2 Multi Storey Car park Pod 1 project(underway
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TRENDS OF NEW PASSENGER CARS IN CHINACO2 EMISSIONS AND TECHNOLOGIES,20222023YUNTIAN ZHANG,HUI HE,YIDAN CHU,AND WENYI KUANGJANUARY 2025ACKNOWLEDGMENTSThis project is part of the NDC Transport Initiative for Asia(NDC-TIA).NDC-TIA is part of the International Climate Initiative(IKI).IKI is working under the leadership of the Federal Ministry for Economic Affairs and Climate Action,in close cooperation with its founder,the Federal Ministry of Environment and the Federal Foreign Office.For more information visit https:/www.ndctransportinitiativeforasia.org/.International Council on Clean Transportation 1500 K Street NW,Suite 650 Washington,DC 20005communicationstheicct.org|www.theicct.org|TheICCT 2025 International Council on Clean Transportation(ID 278)Please share your valuable insights about NDC-TIA knowledge product(s)by taking this short survey:https:/ REPORT|TRENDS OF NEW PASSENGER CARS IN CHINA:CO2 EMISSIONS AND TECHNOLOGIES,20222023TABLE OF CONTENTS1.Introduction.12.Market trends.23.CO2 emission rates and control technologies.64.Efficiency performance of NEVs.115.Vehicle characteristics.146.Annex.196.1.Data sources and availability.196.2.NEV fuel consumption and CO2 emissions.196.3.Use and conversion of data across different test cycles.206.4.Vehicle segments.20iiICCT REPORT|TRENDS OF NEW PASSENGER CARS IN CHINA:CO2 EMISSIONS AND TECHNOLOGIES,20222023LIST OF FIGURESFigure 2-1.Passenger car sales by fuel type and the share of new energy vehicles(NEVs)in the market.3Figure 2-2.Passenger car sales share by segment .3Figure 2-3.Passenger car sales by segment normalized to 2012 levels(2012=100%).4Figure 2-4.Top-selling passenger car model series in 2022 and 2023 by market share.4Figure 2-5.Market share of passenger cars by segment and fuel type in 2023.5Figure 3-1.Passenger car characteristics and CO2 emission rates normalized to 2012 levels(2012=100%).7Figure 3-2.Fleet-average CO2 emission rates of passenger cars by fuel type and fuel consumption regulation phase .7Figure 3-3.Fleet-average CO2 emission rates of passenger cars by vehicle segment(ICE and NEV combined).8Figure 3-4.Fleet-average CO2 emission rates by passenger car segment(ICE only).8Figure 3-5.Market penetration of electric vehicles by passenger car segment.9Figure 3-6.Market penetration of air intake,fuel supply,and transmission technologies among ICE passenger cars.10Figure 4-1.Fleet-average vehicle and battery performance indicators of new battery electric passenger cars sold between 2012 and 2023.11Figure 4-2.Fleet-average vehicle and battery performance indicators of new plug-in hybrid electric passenger cars sold between 2012 and 2023.12Figure 4-3.Sales of new energy passenger cars by technology and share of range-extended electric vehicle(REEV)sales by manufacturer.12Figure 4-4.Sales-weighted average electric range of new energy passenger cars .13Figure 4-5.Sales-weighted average energy consumption of new energy passenger cars.13Figure 5-1a.Sales-weighted average horsepower of all passenger cars by segment.15Figure 5-1b.Sales-weighted average horsepower of ICE passenger cars by segment.15Figure 5-2a.Sales-weighted average curb weight of all passenger cars by segment.16Figure 5-2b.Sales-weighted average curb weight of ICE passenger cars by segment.16Figure 5-3.Sales-weighted average engine displacement of ICE passenger cars by segment.17Figure 5-4a.Sales-weighted average footprint of ICE passenger cars by segment.17Figure 5-4b.Sales-weighted average footprint of ICE passenger cars (20122021)and all passenger cars(20222023)by segment.18LIST OF TABLESTable 6-1.Data effective fill rate(all cars,fleet level).19Table 6-2.Data effective fill rate(ICE only,fleet level).191ICCT REPORT|TRENDS OF NEW PASSENGER CARS IN CHINA:CO2 EMISSIONS AND TECHNOLOGIES,202220231.INTRODUCTIONThe 2022/2023 edition of this report offers a statistical and infographic overview of the latest trends in the Chinese passenger car market.As with the previous report,this edition covers vehicle specifications,carbon dioxide(CO2)emission rates,and associated emission control technologies that reflect recent regulatory changes.1 Notably,this edition also expands the focus on zero-emission vehicles.We highlight the significant growth of electric vehicles and their substantial influence on the overall emission trends in the Chinese passenger car market.This report is organized as follows.Chapter 2 explores market trends for newly registered passenger cars,mainly in terms of sales.Chapter 3 examines the CO2 emission trends of the new passenger car fleet and performance at the segment level,as well as fuel-saving and CO2 emissions reduction technologies.Chapter 4 looks at the change in new electric vehicles characteristics and indicators for battery performance.Finally,Chapter 5 gives a brief analysis of how the physical parameters of passenger cars have changed in recent years.1 Yuntian Zhang,Hui He,and Zhinan Chen,Trends of New Passenger Cars in China:Air Pollutant and CO2 Emissions and Technologies,20122021(International Council on Clean Transportation,2023),https:/theicct.org/publication/pv-china-trends-report-jan23/.2ICCT REPORT|TRENDS OF NEW PASSENGER CARS IN CHINA:CO2 EMISSIONS AND TECHNOLOGIES,202220232.MARKET TRENDSHere we cover trends in new passenger cars sold from 2012 to 2023 by powertrain technology,vehicle segment,and manufacturer.We also present the annual top-selling vehicle models and analyze powertrain technologies by segment.From 2021 to 2023,the market saw modest growth.Approximately 21 million new passenger cars were sold in 2023 after a slight dip in 2022.However,there was a significant surge in sales of battery electric vehicles(BEVs)and plug-in hybrid vehicles(PHEVs),from 14%of sales of new passenger cars in 2021 to nearly 35%in 2023.This is an effect of policy packages promoting electric vehicles at the national and regional levels.2 In particular,annual registrations of new PHEVs increased more than fourfold from 2021 to 2023(Figure 2-1).Sport utility vehicles(SUVs)continue to reign as the dominant segment in the market with 47%of passenger car sales in 2023.3 SUVs and C-class sedans have grown most rapidly over the past decade.In contrast,mini and small cars saw a steady decline in market share through 2020,then recorded a temporary growth in sales in 2021 before declining again.This showcases a shift in the Chinese passenger car market toward more powerful vehicles and vehicles with more spacious interiors(Figure 2-2 and Figure 2-3).4 In 2023,electric vehicle models featured prominently in the top-selling model list,occupying six out of the 10 most popular spots.Additionally,it marked the first time an electric car model clinched the top spot in new passenger car sales in China(Figure 2-4).In contrast to 2021,whenas indicated in our last trend reportelectronic technologies were concentrated primarily in the A00 and SUV classes,there has been rapid penetration of electric vehicles across all car segments.Notably,the SUV segment experienced the biggest surge in the share of BEVs and PHEVs from 2022 to 2023,rising from 10%to approximately 34%(Figure 2-5).2 For more details,see ICCT publications on electric vehicle policies and trends in China:https:/theicct.org/insight-analysis/publications/?_region=china&_sector=light-vehicles3 See the Annex for information on the classification of vehicle segments.4 Though SUVs in China come in various sizes and can be further categorized into subsegments such as compact SUVs,midsize SUVs,and full-size SUVs,they are often more powerful and have larger interior space than their sedan/hatchback counterparts.3ICCT REPORT|TRENDS OF NEW PASSENGER CARS IN CHINA:CO2 EMISSIONS AND TECHNOLOGIES,20222023Figure 2-1Passenger car sales by fuel type and the share of new energy vehicles(NEVs)in the market0%5 %05812162024201220132014201520162017201820192020202120222023Share of NEVsSales(millions)Battery electric(BEV)Fuel cell(FCEV)Plug-in hybrid electric(PHEV)Hybrid electric(HEV)Bi-fuelCompressed natural gas(CNG)MethanolDieselGasolineNew energy vehicle(NEV)shareTHE INTERNATIONAL COUNCIL ON CLEAN TRANSPORTATION THEICCT.ORGFigure 2-2Passenger car sales share by segment 0 0Pp0 1220132014201520162017201820192020202120222023Sales shareSUVOthers*CBA00A0A*The“Others”segment includes multipurpose vehicles(MPVs),crossover vehicles,minibuses,and sports cars.THE INTERNATIONAL COUNCIL ON CLEAN TRANSPORTATION THEICCT.ORG4ICCT REPORT|TRENDS OF NEW PASSENGER CARS IN CHINA:CO2 EMISSIONS AND TECHNOLOGIES,20222023Figure 2-3Passenger car sales by segment normalized to 2012 levels(2012=100%)A00A0ABCSUVOthers00 0000P00 1220132014201520162017201820192020202120222023Relative percentageTHE INTERNATIONAL COUNCIL ON CLEAN TRANSPORTATION THEICCT.ORGFigure 2-4Top-selling passenger car model series in 2022 and 2023 by market shareMixed modelICE modelBEV modelPHEV model20222023Tesla Model YBYD Song PlusToyota CamryBYD Qin PlusVolkswagen LavidaBYD DolphinVolkswagen SagitarBYD Yuan PlusWuling Hongguang miniNissan Sylphy1.06%2.17%1.67%1.77%1.34%1.55%1.36%1.35%1.12%1.88VPHEV31iVPHEV25.1t.9%Nissan SylphyWuling Hongguang miniBYD Song PlusTesla Model YBYD Qin PlusToyota CorollaToyota CamryGreat Wall Haval H6Honda Accord2.08%1.89%1.71%1.63%1.42%1.32%1.29%1.19%1.15VPHEV16.9.1VPHEV39.3.7%Volkswagen Lavida1.76%ICEPHEV98.8%1.2%ICEPHEV98.9%1.1%Note:A car model series refers to the manufacturers definition of a line of vehicles with similar marketing names.A series might include more than one model or edition with different power types;for example,the BYD Qin Plus has both a BEV and a PHEV version.THE INTERNATIONAL COUNCIL ON CLEAN TRANSPORTATION THEICCT.ORG5ICCT REPORT|TRENDS OF NEW PASSENGER CARS IN CHINA:CO2 EMISSIONS AND TECHNOLOGIES,20222023Figure 2-5Market share of passenger cars by segment and fuel type in 2023SUV 46.9%A 18.6%B 12.1%C 8.8 4.80 3.1%Others 5.8%Gasoline 61.6ttery electric 23.3%Hybrid electric(HEV)3.8%Plug-in hybrid electric 10.9%Diesel 0.1%Others 0.3%SegmentFuel typeTHE INTERNATIONAL COUNCIL ON CLEAN TRANSPORTATION THEICCT.ORG6ICCT REPORT|TRENDS OF NEW PASSENGER CARS IN CHINA:CO2 EMISSIONS AND TECHNOLOGIES,202220233.CO2 EMISSION RATES AND CONTROL TECHNOLOGIESThe type-approval CO2 emission rate of the new passenger car fleet,normalized to the Worldwide harmonized Light-duty Test Cycle(WLTC)decreased by 58tween 2012 and 2023.5 Between 2022 and 2023,the emission rate fell by an annual average of 14%,largely attributable to the swift adoption of electric vehicles.The CO2 emission rate of internal combustion engine(ICE)cars was at a plateau between 2019 to 2021 but then fell in 2022 and 2023 by an annual average of 1.9%.By 2023,the CO2 emission rate was 85%of the 2012 level,as shown in Figure 3-1.Echoing our previous trend report,achievements in reducing CO2 emissions were not halted by increases in vehicle power,weight,and,for ICE vehicles,engine displacement(Figure 3-1).As with the ICE fleet overall,emissions declined for gasoline cars in 2022 and 2023,as shown in Figure 3-2.The CO2 emission rate for gasoline cars decreased 3.1%from 163.7 g/km in 2021 to 158.6 g/km in 2023,equal to an annual drop of 1.6%.The trend for diesel-fueled vehicles is less positive.Diesel cars made up a tiny fraction,just 0.07%,of the passenger car fleet,but average CO2 emissions grew from 208.5 g/km in 2021 to 227.9 g/km in 2023,an increase of 9.3%.This continued an incremental climb in emissions ongoing since 2016.Emissions of hybrid electric vehicles(HEVs,which are non-plug-in hybrids)decreased 7.7%from 128.2 g/km in 2021 to 118.4 g/km in 2022,but then increased slightly in 2023,leading to a 5.7crease in total from 2021 to 2023.PHEVs experienced a major drop in CO2 emissions in recent years:The average emissions decreased by 66.3%,from 105.6 g/km in 2020(when our dataset for PHEVs begins)to 35.6 g/km in 2022,or approximately 41.9%annually.Emission reductions were not significant for PHEVs in 2023(Figure 3-2).The segment-level analysis(Figure 3-3)reflects the fleets swift electrification and improving fuel efficiency,with most segments recording notably lower CO2 emissions since 2021.SUVs,the most popular segment,went from an emission rate of 157.5 g/km in 2021 to 115.4 g/km in 2023,a reduction of 26.7%the first year and 14.4%the second year.The emission rate had not been improving for the A0 segment before 2021,but then emissions fell 45.2%from 139.9 g/km in 2021 to 76.6 g/km in 2023,an average reduction of 26%for each of the 2 years.Thus,the A0 segment appears to be following a similar path as the one forged by the A00 segment,which became almost fully electric in 2021(Figure 3-3 and Figure 3-5).On the ICE side(Figure 3-4),CO2 emission rates declined moderately for most segments since 2021.The SUV segment,with a decrease in average emissions by 4.4%from 171.7 g/km in 2021 to 164.2 g/km in 2023,closed its gap with the C segment in type-approval CO2 performance.The A segment reduced its average CO2 emissions from 144.2 g/km in 2021 to 133.4 g/km in 2023,or 7.5%in 2 years.This fuel consumption rate in 2023 is lower than for vehicles in the physically smaller A0 segment.This could reflect the A0 shift toward electric vehicles and a lack of motivation by manufacturers to further improve the efficiency of the remaining A0 ICE models.The electrification rate by segment in Figure 3-5 partly explains the CO2 emissions in Figure 3-3 and Figure 3-4.The vanguard segments of electrificationA00 became 100%electrified in 2021,while A0 was 44.2%electrified in 2023have made faster progress in CO2 emissions reduction.Other segments are also following the trend.In 2023,the share of electric vehicles was 34%for the SUV and C segments,29%for the B and A segments,and 19%for the others category.Nevertheless,the pace of electrification has slowed in the C and A segments since 2022.The penetration rate of electric SUVs is roughly equal to the 35%NEV share of the entire fleet(Figure 3-5).5 The CO2 emission rate results in this report are universally type-approval results.See Annex 6.3 for test cycle details.7ICCT REPORT|TRENDS OF NEW PASSENGER CARS IN CHINA:CO2 EMISSIONS AND TECHNOLOGIES,20222023The adoption of technologies conducive to lower CO2 emissions for ICE cars has continued to grow.The market penetration of turbochargers and superchargers increased from 62%in 2021 to 68%in 2023.Gasoline direct injectionalong with dual port injection,which combines direct and port injection technologyincreased from 68%in 2021 to 79%.Regarding transmissions,automatic transmission and continuously variable transmission continue to dominate the ICE fleet,moving from 80%penetration in 2021 to 94%in 2023(Figure 3-6).Figure 3-1Passenger car characteristics and CO2 emission rates normalized to 2012 levels (2012=100%)Rated power(ICEs)Curb weight(all vehicles)Engine displacement(ICEs)CO2 emission rate(ICEs only)CO2 emission rate(all vehicles)50p000000 1220132014201520162017201820192020202120222023Relative percentageTHE INTERNATIONAL COUNCIL ON CLEAN TRANSPORTATION THEICCT.ORGFigure 3-2Fleet-average CO2 emission rates of passenger cars by fuel type and fuel consumption regulation phase FLEET AVERAGEDieselGasolineHEVPlug-in hybrid electricBattery electric050100150200250201220132014201520162017201820192020202120222023CO2 emissions(g/km,normalized to WLTC)Phase 2Phase 3Phase 5Note:Chinas passenger car fuel consumption regulations(National standards GB-19578 series and GB-27999 series together)were enacted by the Ministry of Industry and Information Technology.The regulations,first introduced in 2004,have progressed to the current Phase 5 with both per-model and corporate average fuel consumption requirements.THE INTERNATIONAL COUNCIL ON CLEAN TRANSPORTATION THEICCT.ORG8ICCT REPORT|TRENDS OF NEW PASSENGER CARS IN CHINA:CO2 EMISSIONS AND TECHNOLOGIES,20222023Figure 3-3Fleet-average CO2 emission rates of passenger cars by vehicle segment(ICE and NEV combined)AA0A00BCOthersSUVFLEET AVERAGE020406080100120140160180200220201220132014201520162017201820192020202120222023CO2 emissions(g/km,normalized to WLTC)THE INTERNATIONAL COUNCIL ON CLEAN TRANSPORTATION THEICCT.ORGFigure 3-4Fleet-average CO2 emission rates by passenger car segment(ICE only)A00A0ABCSUVOthersICE FLEET AVERAGE120130140150160170180190200210220201220132014201520162017201820192020202120222023CO2 emissions(g/km,normalized to WLTC)Note:The A00 class achieved nearly full electrification in 2021.Emissions data collected for this class since then represent very few cars(fewer than 100).Therefore,a dotted line is used to represent Segment A00 between 2020 and 2023.THE INTERNATIONAL COUNCIL ON CLEAN TRANSPORTATION THEICCT.ORG9ICCT REPORT|TRENDS OF NEW PASSENGER CARS IN CHINA:CO2 EMISSIONS AND TECHNOLOGIES,20222023Figure 3-5Market penetration of electric vehicles by passenger car segmentA00A0ABCSUVOthers0 0Pp0 1220132014201520162017201820192020202120222023Penetration rateTHE INTERNATIONAL COUNCIL ON CLEAN TRANSPORTATION THEICCT.ORG10ICCT REPORT|TRENDS OF NEW PASSENGER CARS IN CHINA:CO2 EMISSIONS AND TECHNOLOGIES,20222023Figure 3-6Market penetration of air intake,fuel supply,and transmission technologies among ICE passenger cars0 0Pp0 12201320142015201620172018201920202021202220230 0Pp0 12201320142015201620172018201920202021202220230 0Pp0 1220132014201520162017201820192020202120222023Market penetration rateMarket penetration rateMarket penetration rateTurbo/superchargedNaturally aspiratedAir intakeFuel supplyTransmissionDual-port injectionDirect injectionMulti-point manifold injectionOthersConstantly variable transmissionAutomatic transmissionManual transmissionTHE INTERNATIONAL COUNCIL ON CLEAN TRANSPORTATION THEICCT.ORG11ICCT REPORT|TRENDS OF NEW PASSENGER CARS IN CHINA:CO2 EMISSIONS AND TECHNOLOGIES,202220234.EFFICIENCY PERFORMANCE OF NEVSThanks to the central subsidy and NEV credit policies in the 2010s,key efficiency metrics for NEVs such as electric range and electric energy consumption have shown continuous improvement since 2015.6 For BEVs,curb weight in 2023 was 111%of the curb weight in 2012,which is in line with the increase in battery mass.This indicates that the change in vehicle weight was mainly driven by increased battery mass.Continuously advancing battery technology also led to a surge in electric drive range between 2017 and 2019(Figure 4-1 and Figure 4-2).However,the sales-weighted electric drive range for BEVs grew at a slower rate after 2019 as subsidies were phased out.PHEVs were less affected by the policy change,as consumer demand for longer-range PHEVs spurred bigger increases in electric drive range(Figure 4-4).This preference in the market also fueled the rapid growth of range-extended electric vehicles(REEVs),which are currently classified as PHEVs,and was propelled by NEV start-ups such as Li Auto,Leapmotor,and AITO(Figure 4-3).Figure 4-1Fleet-average vehicle and battery performance indicators of new battery electric passenger cars sold between 2012 and 2023E-range Energy consumptionBattery energy densityBattery massCurb weight0P00 0%0 1220132014201520162017201820192020202120222023Relative percentageNote:Energy consumption data are available only from 20172022.THE INTERNATIONAL COUNCIL ON CLEAN TRANSPORTATION THEICCT.ORG6 See Annex 6.3 for test cycle details.12ICCT REPORT|TRENDS OF NEW PASSENGER CARS IN CHINA:CO2 EMISSIONS AND TECHNOLOGIES,20222023Figure 4-2Fleet-average vehicle and battery performance indicators of new plug-in hybrid electric passenger cars sold between 2012 and 2023E-rangeEnergy consumptionBattery energy densityBattery massCurb weight0P00 0%0 1220132014201520162017201820192020202120222023Relative percentageNote:Energy consumption data are available only from 20172022.THE INTERNATIONAL COUNCIL ON CLEAN TRANSPORTATION THEICCT.ORGFigure 4-3Sales of new energy passenger cars by technology and share of range-extended electric vehicle(REEV)sales by manufacturer01234567820192020202120222023Vehicle sales(millions)Battery electricRegular plug-in hybrid electricRange-extended electricLi Auto 61epal 18%AITO 14%Leapmotor 4M 3%0 0Pp0%Share of REEV sales by manufacturer in 2023THE INTERNATIONAL COUNCIL ON CLEAN TRANSPORTATION THEICCT.ORG13ICCT REPORT|TRENDS OF NEW PASSENGER CARS IN CHINA:CO2 EMISSIONS AND TECHNOLOGIES,20222023Figure 4-4Sales-weighted average electric range of new energy passenger cars 050100150200250300350400450500201220132014201520162017201820192020202120222023Pure electric range(km)NEDCBEV:CLTCPHEV:WLTC/CLTCBattery electric(BEV)Plug-in hybrid electric(PHEV)Note:For the years 20122021,electric range was calculated using the New European Driving Cycle(NEDC)and converted to the Worldwide harmonized Light-duty Test Cycle(WLTC).Starting in 2022,WLTC and China Light-duty vehicle Test Cycle(CLTC)data were used directly.See Annex 6.3 for more information.THE INTERNATIONAL COUNCIL ON CLEAN TRANSPORTATION THEICCT.ORGFigure 4-5Sales-weighted average energy consumption of new energy passenger carsBattery electric(BEV)Plug-in hybrid electric(PHEV)0510152025201720182019202020212022Energy consumption(kWh/100 km)NEDCBEV:CLTCPHEV:WLTC/CLTCNote:For the years 20122021,energy consumption was calculated using the New European Driving Cycle(NEDC)and converted to the Worldwide harmonized Light-duty Test Cycle(WLTC).Starting in 2022,WLTC and China Light-duty vehicle Test Cycle(CLTC)data were used directly.See Annex 6.3 for more information.THE INTERNATIONAL COUNCIL ON CLEAN TRANSPORTATION THEICCT.ORG14ICCT REPORT|TRENDS OF NEW PASSENGER CARS IN CHINA:CO2 EMISSIONS AND TECHNOLOGIES,202220235.VEHICLE CHARACTERISTICSThis section examines the key characteristics of new passenger cars in China including horsepower,vehicle mass,engine displacement,and footprint.This section also analyzes the historical trends of these metrics across segments.The overall horsepower of passenger cars increased slightly in most segments.The SUV segment demonstrated steady growth in average horsepower,rising by 17.9%from 117 kW in 2012 to 137 kW in 2023,surpassing the average horsepower of Class B vehicles in 2023(Figure 5-1a).This represents an average annual increase of 1.4%.Unlike most other segments with steady or increasing power,the B segment showed a downward trend,from 139.7 kW in 2021 to 135.4 kW in 2023,an annual decrease of 1.5%.For the ICE-only fleet,average horsepower increased by 4ch year between 2021 and 2023,slightly faster than in earlier years(Figure 5-1b).Overall curb weight of the entire fleet increased at an annual rate of 2.1%since 2012 for a total increase of 25.1%from 1,295 kg in 2012 to 1,620 kg in 2023.Curb weights increased across nearly all segments,but especially in SUVs,which grew from 1,616kg in 2021 to 1,748 kg in 2023,a 4%annual increase)and the“Others”segment,which increased from 1,592 kg in 2021 to 1,892 kg in 2023,an 8%annual increase(Figure5-2a).Changes in curb weight demonstrated a steeper uptrend in recent years than previously.Together with the growing portion of luxury segments,the explosive sales growth of BEVs and PHEVs contributed to this phenomenon,primarily due to the additional weight of their batteries.In the ICE-only fleet,changes in curb weight were comparatively marginal.The fleet-average weight of ICE cars increased 1.8%annually from 1,497 kg in 2021 to 1,552 kg in 2023,primarily due to the booming SUV segment and heavier multipurpose vehicles and crossover vehicles in the“Others”segment(Figure 5-2b).The B and C segments did not increase much in weight.Although the trend of diminishing differences in average ICE engine displacement across segments remained,the ICE fleet-level average saw a slight increase in recent years,from 1,663 cc in 2021 to 1,725 cc in 2023,an annual increase of 1.8%.Again,this was mainly driven by the more powerful engines of SUVs and vehicles in the Others segment(Figure 5-3).Our analysis of average footprint includes electric vehicles in 2022 and 2023(owing to improved data completeness),and we find that most segments(A,B,C,and SUV)maintained or expanded interior space compared with the ICE fleet(Figure 5-4a and Figure 5-4b).SUVs,the segment with the biggest volume of new cars,increased their average footprint 1.5%from 4.39 m2 to 4.46 m2.This suggests that the vehicle fleet,with a large number of NEVs,continues to provide larger interior space and stronger carrying capacity.For A0s and A00s,the extensive electrification brings down the average footprint,mostly because the small(compared with ICE models)electric models developed in early years were usually more downsized and structurally simplified to target specific customer groups;this is exemplified by models like the Wuling Hongguang Mini.These smaller segments are also notably expanding their vehicle sizes.15ICCT REPORT|TRENDS OF NEW PASSENGER CARS IN CHINA:CO2 EMISSIONS AND TECHNOLOGIES,20222023Figure 5-1aSales-weighted average horsepower of all passenger cars by segmentAA0A00BCOthersSUVFLEET AVERAGE20406080100120140160180201220132014201520162017201820192020202120222023Horsepower(kW)All vehiclesFigure 5-1bSales-weighted average horsepower of ICE passenger cars by segmentHorsepower(kW)A00A0ABCSUVOthersICE FLEET AVERAGE20406080100120140160180201220132014201520162017201820192020202120222023ICE onlyNote:Horsepower data for NEVs are unavailable for 2017.Therefore,Figure 5-1a uses dotted lines between 2016 and 2018 for all vehicles to simulate the possible trend.In Figure 5-1b,a dotted line is used for the A00 segment between 2020 and 2023;the A00 segment achieved nearly full electrification in 2021,and thus data since then represent very few ICE cars(fewer than 100).THE INTERNATIONAL COUNCIL ON CLEAN TRANSPORTATION THEICCT.ORG16ICCT REPORT|TRENDS OF NEW PASSENGER CARS IN CHINA:CO2 EMISSIONS AND TECHNOLOGIES,20222023Figure 5-2aSales-weighted average curb weight of all passenger cars by segmentAA0A00BCOthersSUVFLEET AVERAGE7008009001,0001,1001,2001,3001,4001,5001,6001,7001,8001,900201220132014201520162017201820192020202120222023Curb weight(kg)All vehiclesFigure 5-2bSales-weighted average curb weight of ICE passenger cars by segmentA00A0ABCSUVOthersICE FLEET AVERAGE7008009001,0001,1001,2001,3001,4001,5001,6001,7001,8001,900201220132014201520162017201820192020202120222023Curb weight(kg)ICE onlyNote:Curb weight data is unavailable for the A00 segment for 2018.Therefore,Figure 5-2a uses dotted lines between 2017 to 2019 to simulate a possible trend for this segment.In Figure 5-2b,a dotted line is used for the A00 segment between 2020 and 2023;the A00 segment essentially achieved full electrification in 2021,so data since then represents very few ICE cars(fewer than 100).THE INTERNATIONAL COUNCIL ON CLEAN TRANSPORTATION THEICCT.ORG17ICCT REPORT|TRENDS OF NEW PASSENGER CARS IN CHINA:CO2 EMISSIONS AND TECHNOLOGIES,20222023Figure 5-3Sales-weighted average engine displacement of ICE passenger cars by segmentA00A0ABCSUVOthersICE FLEET AVERAGE1,0001,2001,4001,6001,8002,0002,2002,400201220132014201520162017201820192020202120222023Engines displacement(cc)ICE onlyNote:The A00 class essentially achieved full electrification in 2021,so data since then represents very few ICE cars(fewer than 100).Therefore,this chart uses a dotted line for this segment between 2020 and 2023.THE INTERNATIONAL COUNCIL ON CLEAN TRANSPORTATION THEICCT.ORG18ICCT REPORT|TRENDS OF NEW PASSENGER CARS IN CHINA:CO2 EMISSIONS AND TECHNOLOGIES,20222023Figure 5-4aSales-weighted average footprint of ICE passenger cars by segmentA00A0ABCSUVOthersICE FLEET AVERAGE2.533.544.55201220132014201520162017201820192020202120222023Footprint(m2)ICE onlyFigure 5-4bSales-weighted average footprint of ICE passenger cars(20122021)and all passenger cars(20222023)by segmentFootprint(m2)A00A0ABCSUVOthersFLEET AVERAGE2.533.544.55201220132014201520162017201820192020202120222023ICEs only(2012-2021),all vehicles(2022-2023)All vehiclesICEs onlyNote:Footprint data for 2020 are not shown because of limited data availability.To simulate a possible trend,dotted lines connect the 2019 and 2021 data points in Figure 5-4a and 5-4b.Fleet-level footprint data for all vehicles are only available since 2022.THE INTERNATIONAL COUNCIL ON CLEAN TRANSPORTATION THEICCT.ORG19ICCT REPORT|TRENDS OF NEW PASSENGER CARS IN CHINA:CO2 EMISSIONS AND TECHNOLOGIES,202220236.ANNEX6.1.DATA SOURCES AND AVAILABILITYThis report used several independent datasets and analyses from the China Automotive Technology and Research Center(CATARC Co.Ltd),ZEDATA,Gasgoo Data,and China EV100.All data were further treated by the ICCT for consistency and quality control.The following tables detail the percentage of valid data by vehicle information/parameter and year.Table 6-1Data effective fill rate(all cars,fleet level)Year201220132014201520162017201820192020202120222023Sales100.000.000.000.000.000.000.000.000.000.000.000.00%Fuel type100.000.000.000.000.000.000.000.000.000.000.000.00%Segment100.00.97.98.96.940.00.57.20.86.430.000.00%Model100.000.000.000.000.000.000.000.00.670.000.000.00%Curb weight99.35.37.98.95.99.960.000.00.940.000.000.00%Horsepower*99.26.27.39.25.05.99.89.19.91.94.910.00%Engine displacement*99.90.77.65.41.23.990.000.00.940.00.970.00%Wheel base99.24.09.47.29.06.000.00.980.000.000.000.00%Wheel track*99.17.06.45.27.04.00.79.93%0.00t.35.600.00%Footprint*99.17.06.45.27.04.00.79.93%0.00t.35.600.00%Transmission type*99.54.48.54.33.07.00.790.00.58s.520.000.00%Fuel supply*95.69.82.20.41.51.00.79.93.56r.930.000.00%Intake*96.27.22.35.51.56.00.79.93.43r.930.000.00%Number of seats*99.89.73.60.35.07.00.79.76.10.010.00%0.00%Fuel consumption*89.20.84.89.73.07.74.47.80.12.16.97.48%CO2 emissions*89.20.84.89.73.07.74.47.80.12.16.97.48%*Parameters with an asterisk next to their name have effective fill rates lower than 95%at the fleet level(ICE NEV)for one or more years.Their fill rates are further examined at the ICE-only level in Table 6-2.At the fleet level,some low fill rates are due to the parameter itself,which might be applicable to ICE cars only;in other instances of low fill rates,we removed the analysis of that parameter for certain years or analyzed the parameter only at the ICE level.Table 6-2Data effective fill rate(ICE only,fleet level)Year201220132014201520162017201820192020202120222023Horsepower100.000.000.000.000.000.000.000.00.960.00.950.00%Engine displacement100.000.000.000.000.000.000.000.00.930.00.010.00%Wheel track100.000.000.00.93.970.000.000.00%0.000.000.000.00%Footprint100.000.000.00.93.970.000.000.00%0.000.000.000.00%Transmission type100.000.000.000.000.000.000.000.000.00.880.000.00%Fuel supply100.000.000.000.000.000.000.000.00.65.090.000.00%Intake100.000.000.000.000.000.000.000.00.49.090.000.00%Number of seats100.000.000.000.000.000.00.95.07.00.520.000.00%Fuel consumption100.000.000.000.000.000.000.000.00.99.280.000.00%CO2 emissions100.000.000.000.000.000.000.000.00.99.280.000.00%6.2.NEV FUEL CONSUMPTION AND CO2 EMISSIONSIn calculating fuel consumption and CO emissions in this report,the electricity consumption of NEVs was not converted into an equivalent gasoline/diesel consumption.Instead,the electricity consumption and CO2 emissions of the electric mode of NEVs were treated as zero,in accordance with the statistical methods used in the current evaluation criteria and indicators for passenger vehicle fuel consumption.20ICCT REPORT|TRENDS OF NEW PASSENGER CARS IN CHINA:CO2 EMISSIONS AND TECHNOLOGIES,202220236.3.USE AND CONVERSION OF DATA ACROSS DIFFERENT TEST CYCLESIn Chapter 3,the results for CO emissions and fuel consumption in earlier years were converted from the New European Drive Cycle(NEDC)results to the newer Worldwide harmonized Light-duty Test Cycle(WLTC),which is more aligned with real-world emissions.For 2022 and 2023,however,WLTC data at the individual vehicle model level was used directly.This difference may lead to minor discrepancies due to the simulated and approximate nature of the conversion tool,which may yield slightly different results compared to those obtained directly from laboratory measurements.The NEDCWLTC conversion tool used in this report was developed by the ICCT.This tool was created through simulation of CO emissions and fuel consumption of passenger vehicles with various technical configurations under different test cycles,followed by analysis of relationships among the simulated results across test cycles in different regression models.For further methodological details,refer to the ICCT report on test cycle conversion factors:https:/theicct.org/publication/development-of-test-cycle-conversion-factors-among-worldwide-light-duty-vehicle-co2-emission-standards/.In Chapter 4,the performance parameters of electric vehicles from 2021 and earlier are directly presented as measured under the NEDC cycle.Starting in 2022,BEVs use data measured under the China Light-duty vehicle Test Cycle(CLTC)directly,while PHEVs utilize data measured under either the WLTC or CLTC.The current database does not allow for distinguishing the specific test cycle at PHEV-model level from 2022 onward.Additionally,a reliable conversion tool from CLTC to other test cycles is lacking.Thus,unlike in Chapter 3,results unified under a single test cycle through conversions are not provided for each year.6.4.VEHICLE SEGMENTS This report divides passenger cars into the following classes/segments:A00(minicar),A0(small),A(compact),B(medium),C(large and luxury),SUV,and Others.The SUV class includes sport utility cars that come in various sizes,from compact to luxury,that were all originally labeled and marketed as SUVs.The Others class/segment includes multipurpose vehicles(MPVs),crossover vehicles,minibuses,and sports cars.For the 20122021 data,the segmentation generally follows the raw segment label of each car model in the original dataset,which adheres to a combination of traditional industrial segmentation principles based on vehicle wheelbase and consumer-oriented segmentation methods based on marketing.The 20222023 data mostly use a comprehensive segmentation method that synthesizes the raw results from the segment label and segments based on wheelbase and the number of seats.For the segment-related NEV analyses in Chapters 3 and 4,the segmentation adheres to the markets original classification from the data.www.theicct.org communicationstheicct.orgtheicct.org B E I J I N G|B E R L I N|N E W D E L H I|SA N F R A N C I S CO|SO PAU LO|WAS H I N GTO N D C
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Marine,cargo,and logistics trends report 2023 Marine,cargo,and logistics trends report 2023 2 2Contents01Foreword02Geopolitical risk:Troubled waters03Environmental,social,and governance risks05Workforce risk:Attracting,developing,and retaining talent in an evolving industry06Our Marine,Cargo&Logistics practice04Keeping up with the pace of digitalization347111418Marine,cargo,and logistics trends report 2023 3ForewordMarine,cargo,and logistics organizations that support global supply chains continue to show extraordinary resilience and adaptability.Recent international events,combined with economic challenges and disruptive technologies,have transformed the ecosystem underpinning the movement of goods around the world and highlighted risks for which the industry needs to improve its preparedness.The industry is greatly affected by todays rapidly-changing and interconnected global trends.Understanding the importance and impact of geopolitics,sustainability agendas,technological advances,and the subsequent changing workforce while factoring in further uncertainty will help organizations take the actions needed to plan strategically for the future and retain a competitive advantage.As a critical link in global supply chains,how the industry handles these trends,and their associated accelerating and converging risks,is highly consequential.For example,many governments now consider this sector to be critical national infrastructure given its significance when considering things like food and energy security.The marine,cargo,and logistics sector is responsible for 90%of global trade it is the backbone of the global economy providing development and growth for countries and businesses alike.Digitalization is enabling the industry to do more,faster,with increased transparency and efficiency;while new technologies and forward-thinking leaders with innovative logistics strategies are also driving the industry towards sustainable improvements.Simultaneously,with the potential for geopolitics to disrupt the industry,its constituent businesses are adapting their resiliency by coordinating actions to avoid blockages across the ecosystem.Underpinning all of this has to be a resilient workforce aligned with common goals and values.As organizations continue to adapt and respond to change,Marsh has compiled an overview of four specific trends geopolitics,sustainability(environmental,social,and governance),digitalization,and workforce strategies.In terms of impact on the industry over the coming decade,these four trends remain largely unchanged from previous Global Maritime Issues Monitor findings.They ranked highly in our survey results year-over-year and align with those noted in The Global Risks Report 2023.These challenges also link back to organizations corporate behavioral drivers:access to capital,legislation and regulation,as well as customer,employee,and supplier demands.Because of the accelerated interconnectedness of the global marine,cargo,and logistics industry,organizations should prepare and position themselves to help shape the future.This may lead to further vertical integration and consolidation within the industry,greater cooperation around energy-saving solutions to meet energy transition goals,and a rewriting of skill sets for a digitally augmented future.For centuries,world trade and maritime transport have been fundamental to driving economic opportunity,sustaining economic growth,and spreading prosperity.It is in our common interest to support the industry as it evolves,adapts,and recalibrates to rapidly changing trends.To remain competitive,organizations need to capitalize on new opportunities,be innovative and forward-thinking in meeting any challenges that arise,and ensure that resilience planning and action are at the core of their strategies.MARCUS BAKERGlobal Head of Marine,Cargo&Logistics,Marsh1Marine,cargo,and logistics trends report 2023 4Geopolitical risk:Troubled watersMarine,cargo,and logistics organizations operate in an ecosystem with millions of touchpoints happening every day across global supply chains.The ecosystem can be greatly affected by geopolitics at different levels,from interstate conflict or the threat of conflict,international regulations and sanctions,to differing governmental reactions to events such as global pandemics.Whether shipping goods by air,land,or sea,cargo transportation disruption makes the logistics behind routing,efficient operation of ports and terminals,cost control,and other operational processes critical to success.2Global supply chains have a history of being able to“rewire”themselves.While geopolitical tensions can add uncertainty and the risk of higher costs,greater complexity,and less efficiency,maritime trade volumes are set to triple by 2050 driven by growing world populations and wealth creating opportunities for agile organizations.Plotting a course through disruptionRecent geopolitical events are a reminder that interstate conflict can suddenly restrict global supply chains and the key role played by the marine,cargo,and logistics sector.For instance,the Russia-Ukraine conflict has disrupted trade and logistics in the Black Sea region and complicated operations further afield.The conflict in Yemen has also led to concern for ships traveling in the Red Sea and the Gulf of Aden.The Bab-el-Mandeb Strait,which connects the Red Sea and the Gulf of Aden,is one of several potential marine chokepoints for the global economy.Other chokepoints include the Suez and Panama Canals and the Straits of Hormuz and Malacca.When a chokepoint or major sea route becomes threatened or blocked through accidents,political events,or physical risks due to climate change there can be serious impacts on the industry and those that depend on it.Marine,cargo,and logistics trends report 2023 5Another economic challenge stemming from geopolitical events is the potential impact on fuel prices.For example,at the start of the Russia-Ukraine conflict in early 2022,the rising cost of fuel was cited by shipping companies as a top five concern(from the tenth concern in 2021)in a Global Maritime Forum survey.Geopolitics overall also ranked higher(from ninth in 2021 to third in 2022)in the list of issues with the highest potential impact on the maritime industry.The same survey,however,found respondents to believe the industry was well prepared to meet said challenges,likely a testament to shippings longevity and the number of times it has faced complex issues.The search for alternative trade routes and diversification of supply chains has increased the use of already congested sea areas,river systems,and ports while encouraging agile organizations to find opportunities with new or historically less popular routes.It is not just maritime transit that can be impacted by geopolitical tensions.The Russia-Ukraine conflict has caused supply chain disruption in road,rail,air,and multimodal transportation,resulting in a realignment of trade routes between Europe and Asia.The Eurasian Middle Corridor a multimodal sea and rail route used as an alternative to the rail line in Russias Northern Corridor bypasses higher-risk territories,and transport demand is rising:cargo volumes on the route increased six-fold in 2022.But as routes and means of transit need to adapt to the changing geopolitical landscape,so too do the risk models of the companies using them.Possible conflict must inform resilience planning,especially for companies operating in areas of high tension,such as the South China Sea,where up to one-third of the worlds maritime trade transits.Modeling around the potential closure of chokepoints,routes,or even a critical logistics hub should be included in resilience planning and can provide competitive advantages for organizations that do so.Trade transit can also be complicated by various economic tariffs and trade sanctions imposed by governments and others.The differences between countries sanctions regimes adds additional complexity and risk of breach.Companies that operate internationally need to consider not only sanctions that apply to them domestically and wherever they are operating but also how local sanctions may impact other parties in their supply chain,as well as their banks,lenders,and insurers.Its important for companies to conduct due diligence on partners,counterparties,and their overall supply chains to ensure they are not vulnerable to costly violations or legal blocks.Likewise,conflict or sanctions can complicate insurance market restrictions and the payment of premiums and/or claims.Economic and security challenges Geopolitical events sometimes play a role in sparking local,regional,and global economic crises that reverberate through global supply chains.Such crises can lead to strikes,riots,and civil commotion in or near critical infrastructure,as well as terrorism,piracy,theft,resource scarcity,and large-scale migration.For example,cargo damage and theft typically increase during periods of economic stress and political instability in 2023,cargo theft of retail goods in the US surged 57%higher compared to 2022.Strikes,industrial action,and even malicious damage often attributed to socioeconomic causes at ports,terminals,and elsewhere in the ecosystem can also compromise security and supply chains.Marine,cargo,and logistics trends report 2023 6Understanding the links between geopolitics,economic activity,and security continues to be important for organizations as they prepare resilience strategies,including aspects related to risk finance.Investors,capital providers,insurers,and others typically will want to understand how an organization plans to meet the challenges.Those that undertake such planning are likely to achieve a competitive advantage in capital markets and on the ground.This speaks to the“G”in ESG.New routes offer potential efficiencies and pose new risksThe industry has consistently shown resilience in seeking alternative routes to help alleviate disruptions.With interference to transportation routes,marine,cargo,and logistics companies need to frequently review their supply chain profiles and routing options.They may consider alternatives,including localizing,reshoring,regionalizing,and other de-risking methods.The world is seeing alternate routes result from climate change,notably in the Arctic,where sea ice melting has opened new shipping lanes such as the Northern Sea Route(NSR)and the Northwest Passage(NWP).The new routes have increased accessibility to Arctic ports,with littoral states looking to capitalize on the potential for savings in moving goods under some conditions.However,the region is somewhat sensitive to both geopolitics and environmental politics.Finding opportunity in disruptionCompanies should prioritize improving resilience.Those with a view of the changing landscape and the possible chokepoints across their supply chain are more likely to capitalize on the opportunities available through robust risk management,mitigation strategies,and insurance solutions.Resilience planning,including modeling and scenario/incident management planning prior to an event occurring,allows companies to interrogate how a changing landscape may impact their business model and profitability and allows for contingencies to be considered and implemented.It could also improve ESG ratings.Where risks cannot be sufficiently mitigated to align with risk appetite,insurance solutions designed to protect credit,performance,and political risks continue to provide confidence.Geopolitical considerations and impactsFor marine,cargo,and logistics organizations,geopolitical disruption can lead to a range of direct and indirect impacts,including:Physical damage or loss of ships,trucks,rail cars and/or assets in transportation nodes,and/or cyberattacks a modern weapon used by some state actors,with contagion risk to supply chain partners.Damage to,or degradation of,cargoes including sensitive food,livestock in transit,and medicines and the ability to maintain environmental controls.Delay,disruption,re-routing,and frictional costs.The disruption and/or end of business relationships with certain stakeholders,particularly if sanctions are imposed.Risks to workforce health and safety and increased challenges experienced by crew.Assets trapped or blocked by events,authorities,and/or denial of access to assets or infrastructure.Environmental,social,and governance risksOrganizations are increasingly concerned with sustainability,and environmental,social,and governance(ESG)challenges.Companies are considering not only how they manage the risks but what they can do to capitalize on opportunities.Most marine,cargo,and logistics organizations have moved away from simply being aware of the issues and are now genuinely committed to implementing a strategy.It is time to take action,but many are not sure where to focus their next steps.Environmental concerns hinge on climate,but extend beyondEnvironmental risks are generally considered in two ways:3Marine,cargo,and logistics trends report 2023 7What is the impact of the environment on my business?What is the impact of my business and operations on the environment?Marine,cargo,and logistics trends report 2023 8Although climate is a major theme,environmental concerns for the maritime and logistics industry extend much further.Considerations include minimizing accidental spills of hazardous cargo,meeting regulators and shareholders goals and expectations on decarbonization,adjusting operations at ports and terminals as sea levels rise,navigating the impacts of increasing severe weather events,and managing related supply chain disruptions and the potential of reduced capacity.Decarbonization and navigating new environmental regulations consistently ranked as the top two issues facing the shipping industry in recent surveys.Decarbonization is a key risk for all aspects of the maritime and logistics ecosystem,with shipping companies facing challenges in the transition to low-carbon fuels.For many ship owners and owners of port infrastructure,it is unclear which fuel type will prevail.However,investments are being made in new low-carbon technologies,from alternative fuels to sail power.In ports,decarbonization is driven by operators providing power offtake for ships at berth to reduce air pollution and the potential for water pollution;in some cases,this is powered via renewable energy.Beyond shipping,logistics companies are also investing,for example,in electric vehicles for last-mile deliveries.Managing and mitigating nature-related risks is another priority for many marine,cargo,and logistics organizations that operate in areas prone to weather and climate-related exposures.Climate risks remain a major concern for the industry,raising questions about their potential impact and how they can be assessed,mitigated,and/or insured in the years ahead.Natural catastrophe events can have devastating effects on communities and businesses.Low water levels in river and canal systems,often due to drought,or floods after severe rainfall,can affect the movement of ships and goods and cause infrastructure destruction.Elsewhere,rapid warming in the Arctic has opened up faster shipping channels through northern sea lanes,although caution surrounds the legal,environmental,and geopolitical implications.Risks to organizations continue to evolve as the climate landscape changes.Across the breadth of the maritime and logistics ecosystem it is clear that building environmental resilience is key for operations today and into the future.Sustainable projects are increasingly seen as attractive from an investment returns point of view:nearly 80%of investors in a recent survey said ESG factors were important in their decision making and this is a trend we expect to continue as regulatory and legislative changes come into force.Delivering on ambitious environmental goals requires organizations to have an evolving strategy that aligns with advancements in technology and policy.Why is ESG important to my business?Stakeholders care about your ESG credentials,including:Capital providers(finance and insurance)with their own ESG strategy and Task Force on Climate-Related Financial Disclosures(TCFD)constraints.Regulators(state and supra-national)who may mandate the adoption of ESG or climate-related disclosures.Clients and customers becoming more aware of ESG issues and their role in moving towards ESG-positive products and services.Employees who want their job and employer to reflect ESG values.Shareholders are wary of all the above.Impact of climate change on key infrastructure assets and supply chainsThe Mississippi River is running at historically low levels.This is a concern as it has significant strategic importance:60%of US grain exports leave through the Mississippi River.Because the river is flowing at such low levels,larger ships arent able to get up or downstream as far as they normally could or would.Estimates suggest that low water levels on the Mississippi River contributed to US$20 billion in economic losses in 2022,with some barges grounded and others lightening their load to keep them from sitting too low.The knock-on effects include rising transportation and commodity costs,and increased carbon emissions from re-routing stocks.Its not just grain that comes through the Mississippi;crops,fertilizer,sand and gravel,oil,salt,gas,and glycol all pass through.Glycol is an essential deicing fluid that is used to keep airports operational in freezing weather without it,aircraft are stuck.While it is unlikely there will be a shift to favor land transit over water,the Mississippi River shows the potential impact of climate change on key infrastructure assets.Elsewhere,water levels on the Rhine River have continued to drop owing to high temperatures,putting the trade of huge quantities of goods at risk.A lack of rainfall has affected the Panama Canal,leading to restrictions being imposed on the largest ships passing through the key global trade route.Social issues range from employee safety to diversityThe geographical spread of the industry means that companies are often working in locations with diverse economic and regulatory practices.This can result in disparities and inequities within the workforce regarding healthcare,education,employment opportunities,and digital technology provisions.A lack of,or hard to access,services can widen inequalities,expose potential gaps in benefit packages,and pose reputational risks for businesses.Managing social risks by taking steps to enhance and ensure employees have access to emotional,physical,financial,and social health support can benefit businesses in two ways:Potential health issues and risks are identified and mitigated early.Improved employee well-being can drive significant gains in performance,engagement,and retention,as well as better financial returns and innovation.For the marine,cargo,and logistics industry,much of the discussion in recent years has been around employee health and safety.For example,companies are exploring ways to improve employee safety when transporting or storing cargo.The risk of fire on vessels is among shippings most significant safety issues.Safetys current significance can be seen in the the International Maritime Organizations(IMO)adoption of the theme for 2024:“Navigating the future:Safety first!”The theme is linked to the UN 2030 Agenda for Sustainable Development and several of the UNs Sustainable Development Goals(SDGs),which include promoting full and productive employment and decent work for all people.Aligning to the UN SDGs is one way for marine,cargo,and logistics organizations to show a commitment to ESG.Another social concern across the industry is assimilating the workforce to new ways of working,including the automation and digitalization of processes.Workforce diversification and development is increasingly seen as a financial imperative as investors and capital providers examine diversity,equity,and inclusion(DE&I)results in ESG reporting.The crew change crisis,which saw thousands of seafarers forced to spend longer at sea during the COVID-19 pandemic highlighted concerns about human rights and the existence of modern slavery conditions for some workers on ships,in ports,and elsewhere.These conditions can manifest in forced work beyond contract expiry,overwork,and failure to pay wages.Combatting modern slavery,trafficking,and illegal migration is a requirement under various local and global regulations,and requires a dedicated strategy and policies including education and monitoring(including of suppliers).Marine,cargo,and logistics trends report 2023 9Marine,cargo,and logistics trends report 2023 10Governance of“E”and“S”It is critical for companies to have governance structures around their strategy to manage the risks and capture the opportunities afforded by ESG.Governance relates to the framework that boards,investors,and executives use to measure and promote their environmental and social agendas and strategies.Business resilience is critical in ensuring an organization can withstand unexpected aftershocks of a sudden event or an evolving situation.For instance,the Mississippi River example shows the impact that disruption can have across the supply chain.It also provides a reminder of the importance of understanding key pinch points and having contingency plans ready to minimize and mitigate losses.Effective risk management processes integrate climate,environmental,social,and governance risk into company-wide assessments.Overseeing compliance with local regulations can be complex where multiple regulatory jurisdictions may exist,each with differing requirements.Some governance measures must consider local and international regulations,notably the IMOs Energy Efficiency Existing Ship Index.The index requires ships to improve their energy efficiency by looking at ship speed and routing,with success rated by carbon intensity indicators impacting ports,terminals,and logistics firms.Building sustainable foundations Having a strong ESG framework can support mitigation strategies that protect organizations against future risk.The ability to anticipate,measure,and manage risks will be a critical advantage as the transition to a lower-carbon economy unfolds.Marsh can help businesses ensure they are resilient throughout the transition:By understanding the unique risk profile of each business,Marsh can support organizations to develop a risk management plan designed to address each risk and support financial stability,while helping create a world that is sustainable for generations to come.Analyzing the evolving risk environment.Preparing for what may happen.Insuring against new types of risk.1111Marine,cargo,and logistics trends report 2023 Keeping up with the pace of digitalization Effective and efficient expansion of digitalization is key to the future success of global supply chains.While embracing vast opportunities for speed and efficiency,organizations should ensure that they can also manage the challenges and risks that come with digital transformation.Logistics constraints,rising demand for consumer goods,increased e-commerce,and a surge in freight rates during the COVID-19 pandemic have added urgency to the industrys digital progress.With its opportunities,digitalization brings new challenges:evolving cybersecurity needs,changes to operational processes,supply chain fragility,increased competition,and enterprise-wide business risk.4Marine,cargo,and logistics trends report 2023 12Building cyber resilienceAlongside digitalization,technology upgrades,and automation,organizations need to reinforce and upgrade their cybersecurity.No organization is immune to a cyberattack and cyber risk cannot be mitigated to zero.According to a DNV survey of maritime professionals,90%of respondents said they expected disruption of ship/fleet operations from cyber incidents.In 2022,there were at least 57 known ransomware attacks across the maritime industry,with many attacks relating to IT security and perpetuated through supply chains.The global supply chains digital backbones are exposed to a range of cyber-related vulnerabilities.Financial loss can occur through operational downtime,business interruption,litigation,and reputational damage.Non-financial loss is also present in safety risk,especially in terms of operational technologies.Ports and terminals are generally considered critical national infrastructure as any disruption can ripple through global supply chains,causing significant upheaval,cost,food insecurity,and even defense issues.To better protect against cyber risks in the supply chain and workforce,it is important that organizations understand the full scope of their data and digital relationships(including with their suppliers and customers).This requires understanding the digitized aspects of the physical supply chain,the Internet of Things(IoT),and operational technologies,such as those used in navigation and engine management,vessel tracking,cranes,stackers,and chassis.In the last few years,cyber insurers have called for increasingly detailed information about companies cybersecurity controls,including information about measures in place among vendors and suppliers.Cyber risk is not simply a technology challenge or a software issue it is an enterprise-wide,constantly evolving,and human risk that must be actively managed.Dramatic advances in supply chain interconnectivity,automation and digitization,and critical infrastructure status mean maritime and logistics organizations may need new mitigation strategies.To thrive,they must move beyond protection to resilience.Cybercrime and cyber insecurity ranked among the top ten short and long-term risks in the Global Risks Report 2023 prepared by the World Economic Forum with the support of Marsh McLennan.Taking the first step The optimal approach to cyber resilience depends on each organization.Marsh works with organizations to refine and evolve an approach in a fast-changing landscape as new technologies and supply chain partners bring new vulnerabilities.One important first step is to understand the organizations standing against 12 widely-accepted cybersecurity controls.In addition,Marshs Cyber Self-Assessment diagnostic empowers organizations to evaluate their maturity in relation to these controls.Marine,cargo,and logistics trends report 2023 13Managing and adapting to supply chain risksAdvances in digital technology are enabling organizations to improve supply chain performance and boost their resilience to shocks when the movement of goods is disrupted.Existing supply chain approaches are often adequate,with a lot of“muscle memory”used in problem solving.However,to be truly resilient and take advantage of opportunities,organizations need to assimilate and adapt to data.With ships carrying 90%of the goods traded globally through tens of thousands of ports,analytics and other technologies can take organizations from reactive to proactive,enabling them to make timely and effective supply chain and risk management operational decisions.Recent disruptive events including the COVID-19 pandemic,the temporary blockage of the Suez Canal in 2021,labor shortages,and the Russia-Ukraine conflict highlighted organizations use of digital tools to make rapid supply chain decisions by establishing situational awareness and forecasting ship flow.This shows that managing supply chain risks requires robust mitigation strategies that can optimize routes and scheduling,streamline required documentation,recommend corrective measures,and more.The overall complexity of digital supply chains makes it increasingly difficult to know where to look to identify risk,underscoring the importance that risk professionals have visibility across the entire organization.Understanding and projecting supply chain risks requires companies to consider resilience during strategy and planning cycles.Digital supply chain modeling tools can support with risk analysis and horizon scanning,which can help organizations assess how they are affected by supply chain pressures.The risks and opportunities stemming from big data,artificial intelligence,and other technology advances creates new dynamics beyond cyber security.Comprehensive data and analytical tools in areas including vessel navigation,cargo management,routing,and supply chain optimization can help organizations identify their exposures to a variety of risks and highlight opportunities,which in turn can drive strategy and planning helping them to remain ahead of the competition and increase the chance of operational success.However,harnessing big data brings challenges including handling and securing the volume of data,and optimizing the data to make informed decisions which often requires new skill sets.Recent surveys in the maritime sector found that respondents see big data and artificial intelligence as having a high impact in the coming years,but believe the industry is generally unprepared to manage them.Those companies that effectively manage digitalization and its attendant risks and opportunities will see a competitive advantage over those that dont.Marshs services leverage data,technology,and analytics to help organizations better quantify and manage risk.For instance,Marshs range of digital cargo solutions can aid owners of cargo to more efficiently transact insurance.Staying competitive with data and technology-driven tools and insights5Workforce risk:Attracting,developing,and retaining talent in an evolving industryThe maritime and logistics ecosystem is being redefined.Customer expectations,regulator intervention,capital provision,technological transformation,vertical integrations,new business models,and evolving expectations from workers themselves are driving organizations to embrace change.Attention to workforce opportunities is crucial.Marine,cargo,and logistics trends report 2023 14In a sector renowned for the diversity of its workforce from roles and responsibilities through to geographical location there has never been the ability to take a one size fits all approach.Global trends such as digitalization and decarbonization are changing the world and with it the talent landscape,prompting organizations to rethink how they recruit and retain people.As companies continue to diversify and digital solutions become embedded in core operations,attracting,developing,and retaining talent is a priority.Responding to the talent challengeOrganizations are facing pressure to find talent with the right skillset needed to build tomorrows workforce.In highly-competitive markets,the supply of talent is shifting at a time when demand for skills is increasing.For example,rising online sales and labor shortages could see demand outpace supply for seafarers;the International Chamber of Shipping and Bimco warns recruitment levels must“significantly increase”to avoid a shortfall.Demographic changes,including aging workforces and variances in birth rates,are redistributing the working-age population worldwide,adding to recruitment competition.Societal shifts,such as labor and skill shortages and demographic changes,are just some of the factors that organizations must consider as they undergo digitalization and sustainability transitions with far-reaching implications for the industry and its workforce.Digitalization,in particular,is influencing the skills that organizations need,and impacting how work is undertaken and delivered.Many organizations are expanding their capacity in roles that require digital skills.Increasingly,the industry offers workers the possibility of remote working,diversified careers,pathways to advancement,and modern transferable skills.Workers across the maritime and logistics ecosystem at sea and on land can have varied careers in areas such as data science,artificial intelligence(AI),cyber security,robotics,analytics,environmental science,and sustainability.These entry points can help attract new and more diverse talent,while complementing more traditional roles.Workers with diverse skills will be crucial to the future of many marine,cargo,and logistics companies.As organizations look to attract new talent they must also train and reward existing employees.Organizations with a culture of supporting their workforce and recognizing talent through a competitive rewards,benefits,and training culture will be in a stronger position to differentiate themselves as an employer of choice.Training and qualification courses are a staple component of risk management programs and can lead to financial gain if deployed well.Effective and frequent training delivery is critical to getting employees engaged with change,including how it relates to skilled jobs and improved safety with operational technology(OT).Marine,cargo,and logistics trends report 2023 15Marine,cargo,and logistics trends report 2023 16Focusing on well-beingOrganizations across global supply chains are embracing their social responsibility to care for their employees overall well-being.While compensation is often a primary driver for workers,other benefits can be just as attractive,many of which are increasingly tied to health,well-being,and family.This is especially important in a sector where some work requires long hours and/or being away from home for long periods.Forward-thinking employers are offering benefits packages that champion high workforce welfare standards to stand out.This can help to attract and retain talent,and therefore benefit the productivity of the sector as a whole.Employee offerings do however require careful consideration;the global nature of this ecosystem means that employees needs and preferences can vary significantly across different regions and societies,and benefits packages may need to consider local regulations,societal and cultural expectations,the mix of women and men,and age groupings.Leaning into diversity,equity,and inclusion(DE&I)DE&I is an increasingly important component of decision-making criteria when hiring new talent.Research has shown that diverse and inclusive companies perform better,and this is changing leadership mindsets within the industry.For example,companies in the top quartile for gender diversity are 15%more likely to surpass their peers.Organizations can use inclusion and diversity practices as an enabler of business impact and a driver of long-term growth.By embracing DE&I,companies can create a strong ethos that resonates across the business,including among employees,suppliers,investors,and other stakeholder groups.Organizations can accelerate DE&I efforts by involving their workforce in fostering inclusive environments,with training and awareness on DE&I issues,and robust policies and processes that provide equal opportunities.Raising awareness and deploying resources can help organizations demonstrate their commitment to improving DE&I,and improve ESG report scores,but the true measure of success will come in the makeup of the workforce including in leadership positions.Creating an effective DE&I strategy and implementing it meaningfully requires strong,sustained,inclusive leadership,adequate allocation of resources and investment,and accountability.According to Mercers 2023 Health on Demand research,employers can improve their health and benefits strategy by focusing on four key areas:Streamline offerings:Good core benefits,such as medical insurance,coupled with carefully curated additional niche options,can help retain employees and enable them to thrive.For instance,workers who spend long hours away from home could benefit from access to virtual health coaches and on-demand mental health support.Flexibility:Understand employees needs and make sure the benefits strategy is relevant.For example,allowing employees to access their benefits when and where they need them at sea and on land through such things as online self-service portals,mobile apps,and 24/7 access to support services.Focus on access and need:For instance,employers can analyze data to address workforce gaps such as finding ways to make benefits more accessible to low earners.Embed employee resilience:Make well-being part of authentic company culture,for example,committing to addressing workplace burnout through job design,practices,and culture.Several factors are driving the acceleration of diversity,equity,and inclusion(DE&I)efforts:Attracting and retaining talent is increasingly competitive across all industries.Companies that can show they are committed to DE&I practices can attract top talent,enhancing the companys reputation and improving employee satisfaction.Supply chain partners are demanding interface with like-minded,enabled stakeholder colleagues.The COVID-19 pandemic and ongoing geopolitical challenges highlight the need for resilient and agile workers.Capital providers,and others,are increasingly using ESG reporting to assess borrowers performance DE&I is central to the“S”in ESG.Legislators provide levers to ensure corporate behaviors are visible.Marine,cargo,and logistics trends report 2023 17Maintaining productivity and profitabilityIn the post-pandemic global economy,a combination of high inflation,austerity measures,talent shortages,supply chain disruptions,and geopolitical tensions have had significant impacts on both local and global markets.While advances in automation and digitalization represent opportunities for employers and employees,they also require organizations to critically navigate associated challenges.In particular,organizations will need to consider disruption to existing jobs,skills development,and adapting to societal changes that are already underway and impacting how people work.Companies should assess risk over the short-and long-term to identify how these changes may affect their business and people.Marine,cargo,and logistics trends report 2023 18Our Marine,Cargo&Logistics practice Marshs global Marine,Cargo&Logistics practice has over 650 colleagues in 35 countries,allowing us to deliver international brokerage,consulting,and claims advocacy services to clients around the world.With specialized marine,cargo,and logistics expertise leveraging data,analytics,and benchmarking,we can help you determine and prioritize your exposures and help reduce the total cost of risk with innovative and customized solutions.Our proprietary,accessible-anywhere technology allows you to assess risks in real time,monitor activity more closely,and manage claims more efficiently.Our global network and market knowledge allow us to meet your local servicing needs in your time zone without subcontracting or sharing sensitive commercial data with third-party brokers.With broad experience across the global supply chain ecosystem,we can draw on the whole industry,bringing insights,knowledge,expertise,and advice to promote possibility beyond the traditional insurance transaction.Supported by Marsh McLennan colleagues,we can help you evolve your risk profile,develop supply chain modeling and resiliency,consider workforce and talent plans,and build strategies across emerging risk areas,including geopolitics,the sustainability transition,and digitalization.Ports and terminals clientsInsurance innovation award winner in 2023(Ukraine AsOne Cargo Facility)Specialists worldwide 13%of total premium placed with A rated P&I clubs handled by Marsh in 2023Placed approximately US$3.9 billion in premium in 2022Cargo insurance certificates issued through our digital platforms every year250 650 1mn For further advice and guidance on mitigating the risks,please contact your local Marsh representative or visit .6This is a marketing communication.The information contained herein is based on sources we believe reliable and should be understood to be general risk management and insurance information only.The information is not intended to be taken as advice with respect to any individual situation and cannot be relied upon as such.Marsh Specialty is a trading name of Marsh Ltd.Marsh Ltd is authorised and regulated by the Financial Conduct Authority for General Insurance Distribution and Credit Broking(Firm Reference No.307511).Copyright 2023 Marsh Ltd.Registered in England and Wales Number:1507274,Registered office:1 Tower Place West,Tower Place,London EC3R 5BU.All rights reserved.Copyright 2023.23-128078 MC230927573About MarshMarsh is the worlds leading insurance broker and risk advisor.With over 45,000 colleagues operating in 130 countries,Marsh serves commercial and individual clients with data-driven risk solutions and advisory services.Marsh is a business of Marsh McLennan(NYSE:MMC),the worlds leading professional services firm in the areas of risk,strategy and people.With annual revenue over$20 billion,Marsh McLennan helps clients navigate an increasingly dynamic and complex environment through four market-leading businesses:Marsh,Guy Carpenter,Mercer and Oliver Wyman.For more information,visit ,and follow us on LinkedIn and Twitter.
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Advanced Air Mobility(AAM)Implementation Plan Near-term(Innovate28)Focus with an Eye on the Future of AAM Version 1.0/July 2023 ii ADVANCED AIR MOBILITY(AAM)IMPLEMENTATION PLAN,VERSION 1.0 PAGE INTENTIONALLY BLANK iv ADVANCED AIR MOBILITY(AAM)IMPLEMENTATION PLAN,VERSION 1.0 Table of Contents 1 Advanced Air Mobility.1 1.1 AAM Definition.1 1.2 AAM Integration into the National Airspace System.1 1.3 Stakeholder Collaboration.2 2 Introduction to Innovate28.5 3 Implementation Plan Overview.6 4 Innovate28 Key Site Operations.7 4.1 AAM Aircraft.7 4.2 AAM Operations.8 4.3 I28 Scenario.13 5 Innovate28 Workstreams.15 5.1 Certification.15 5.2 Operational Suitability.15 5.2.1 Operations Certification.16 5.2.2 Aircraft Certification.18 5.3 Airspace and Air Traffic Management.20 5.4 Infrastructure.22 5.4.1 Existing Infrastructure.22 5.4.2 New Infrastructure.23 5.4.3 Vertiport-Related Research.23 5.4.4 Vertiport Standards and Oversight.24 5.5 Environment.25 5.6 Hazardous Materials Safety.26 5.7 Community Engagement.27 6 Innovate28 Integrated Schedule.28 7 AAM Evolution Framework.31 v ADVANCED AIR MOBILITY(AAM)IMPLEMENTATION PLAN,VERSION 1.0 List of Figures Figure 1.Integrated Master Schedule Version 1.0.29 List of Tables Table 1.Detailed List of Activities in the Integrated Master Schedule Version 1.0 30 Table 2.AAM Coordination Areas.32 Table 3.AAM Maturity Levels.33 1 ADVANCED AIR MOBILITY(AAM)IMPLEMENTATION PLAN,VERSION 1.0 1 Advanced Air Mobility Transportation is constantly evolving,and each step forward yields new opportunities that fundamentally change how people and goods are being transported.A new era of aviation once only portrayed in movies or science fiction is taking off.Advanced Air Mobility(AAM)is an emerging aviation ecosystem that leverages new aircraft and an array of innovative technologies to provide the opportunity for more efficient,more sustainable,and more equitable options for transportation.1.1 AAM Definition As defined in the AAM Coordination and Leadership Act(P.L.117-203,136 Stat.2227),October 17,2022,“AAM is a transportation system that moves people and property by air between two points in the United States(U.S.)using aircraft with advanced technologies,including electric aircraft,or electric vertical takeoff and landing(eVTOL)aircraft,in both controlled and uncontrolled airspace.”For purposes of this Implementation Plan,however,the scope of AAM is limited to those engaging in passenger-carrying or cargo operations with a pilot on board.1.2 AAM Integration into the National Airspace System The Federal Aviation Administration(FAA)has a long,successful history of bringing new technologies safely into aviation.The agencys role in integrating AAM into the National Airspace System(NAS)is to ensure this new generation of aircraft maintains the highest level of operational safety that defines commercial aviation today.The FAAs top priority and statutory responsibility are to ensure the safety of the traveling public.The agency is 2 ADVANCED AIR MOBILITY(AAM)IMPLEMENTATION PLAN,VERSION 1.0 looking at every necessary aspect to support AAM flights:the aircraft itself,the framework for operations,access to the airspace,operator training,infrastructure development,environmental impacts,and community engagement.As these aircraft are being developed,the FAA will amend,as appropriate,operational rules and pilot training requirements.Longer term,the agency will develop permanent regulations to safely enable powered lift operations and pilot training and certification.The FAA is implementing a crawl-walk-run methodology that recognizes early opportunities to support Entry into Service(EIS)operations through existing services and infrastructure with minimal changes.The agency is doing this while developing a path to implementation of more advanced concepts and capabilities to support increasing scale and automation of AAM operations,as well as integration with other types of aircraft operating in the NAS.To address the development of a near-term ecosystem,the FAA created Innovate28(I28),a joint government and industry initiative that will culminate in integrated AAM operations at one or more key site locations by the 2028 timeframe.The FAA also recognizes and has begun executing the collaborative actions needed to mature AAM concepts,operations,and regulatory frameworks beyond initial operations and into the mid-term and mature state phases(see Section 7).This Implementation Plan shows how the agency expects all these pieces to come together to allow the industry to scale safely.1.3 Stakeholder Collaboration Operationalizing AAM in the NAS and establishing timelines from EIS to operations at scale requires collaboration with,and commitments by,many stakeholders to ensure safe,efficient,and equitable operations,including:Federal Aviation Administration From a federal level,the FAA has sole and exclusive authority over all aviation safety aspects of AAM integration,including operating rules,aircraft certification,and pilot certification.The agency provides a leadership role in identifying and integrating the responsibilities of all the key actors and stakeholders.The FAA develops and processes all certification,policy and procedures,rulemaking,and regulatory activities to ensure safety of flight,and strives to ensure that industry(including original equipment manufacturers(OEMs),aircraft operators,and vertiport operators)and local,state,and tribal governments can accommodate AAM operations and plan accordingly.3 ADVANCED AIR MOBILITY(AAM)IMPLEMENTATION PLAN,VERSION 1.0 In support of I28,the FAA established internal workstreams,called iTeams.These teams are dedicated to addressing major focus areas for AAM integration,including Certification,Airspace and Air Traffic Management,Infrastructure,Environment,Hazardous Materials Safety,and Community Engagement,to ensure a coordinated approach for I28 operations.Other Government Agencies The FAA is leveraging existing programs and research conducted by other government agencies to integrate AAM more rapidly into the NAS,including the National Aeronautics and Space Administration(NASA),U.S.Department of Transportation(DOT),Department of Defense,and others.For example,through the FAAs extensive AAM-focused partnership with NASAs AAM Program and the National Campaign and collaboration with the U.S.Air Force AFWERX Prime programs,the FAA is able to leverage the research,data,and testing experience in the shared mission to safely integrate AAM aircraft.In addition to collaboration at the federal level,the FAA is engaging with local,state,tribal,and territorial governments that have vested interests in making decisions to ensure safe and successful AAM operations from local and regional planning,power infrastructure,intermodal transportation,and community perspectives.These entities will likely be responsible for the coordination,logistics,zoning,licensing of infrastructure,and the community engagement necessary to support AAM operations.Inter-Agency Working Groups The FAA participates in several inter-agency AAM groups,including the DOT AAM Interagency Working Group,which was established by the AAM Coordination and Leadership Act.Much like the FAA iTeams structure,the DOT AAM Interagency Working Group is coordinating efforts related to safety,operations,infrastructure,physical security and cybersecurity,and federal investment necessary for maturation of the AAM ecosystem in the U.S.They are focused on ensuring cohesive and consistent Executive Branch-wide policy through a collaborative and proactive approach that supports the FAAs integration of AAM into the NAS.The FAA also participates in the newly-formed International Civil Aviation Organization(ICAO)AAM Study Group.The 41st ICAO Assembly recognized that the rapidly evolving AAM ecosystem requires a globally harmonized operational and regulatory framework and guidance.ICAO provides the forum for 26 international stakeholders to develop a holistic vision and framework to achieve global harmonization and interoperability of AAM implementation,allowing all countries to benefit from the AAM operations.The FAA and other government agencies participate in all relevant ICAO technical panels that will ultimately work on international standards and recommended practices for AAM as the specific work is forwarded for their action from the AAM Study Group.4 ADVANCED AIR MOBILITY(AAM)IMPLEMENTATION PLAN,VERSION 1.0 AAM Operators and Manufacturers Companies developing or operating AAM aircraft are key stakeholders in the integration process.These companies will need to work with government agencies to bring forward the use cases and locations of interest,obtain necessary certifications and approvals,and ensure that their aircraft and operations meet safety and regulatory requirements.They will also need to consider the environmental impacts of their aircraft and operations,engage with relevant communities,and minimize environmental and other impacts on communities.Infrastructure Providers Any time new transportation is introduced,communities must plan for the integration of those operations either within existing infrastructure or through the development of new facilities.Companies that provide charging stations,vertiports,and other infrastructure necessary for AAM operations will also play a role in integration.Providers of private infrastructure that do not require FAA approval will,in particular,need to engage with relevant communities,minimize environmental and other impacts on communities,and foster community support.Communities and the Public As AAM aircraft begin to operate in urban areas,communities and the general public will be affected by these new technologies,capabilities,and services.Community involvement is the process of engaging in dialogue and collaboration with communities affected by FAA actions.This process supplements the public involvement activities required under other laws or requirements.Public engagement and education through involvement of all stakeholders will be necessary to ensure that communities understand the benefits and impacts of AAM operations,and to address any concerns they may have.The AAM industry offers the prospects of convenient alternatives to traditional transportation,as well as increased access to air transportation.However,for this emerging industry to reach its fullest potential,it must gain the support of the general public.The FAA encourages communities to get involved now in these early phases,and to stay engaged.5 ADVANCED AIR MOBILITY(AAM)IMPLEMENTATION PLAN,VERSION 1.0 2 Introduction to Innovate28 On May 3,2023,the FAA released Version 2.0 of the Urban Air Mobility(UAM)Concept of Operations(ConOps)that describes the technical roadmap for enabling UAM,which is an urban-focused subset of AAM,from the near-term to far-term.The focus of this Implementation Plan,Version 1.0,is to document the work required to enable initial AAM operations in a variety of operational settings or“key sites”in the near-term.Initial Integration of AAM Operations at One or More Key Sites Innovate28(I28)is an FAA initiative that will culminate in integrated AAM operations with OEMs and/or operators flying between multiple origins and destinations at one or more locations in the U.S.by 2028.I28 marks one milestone on the AAM evolutionary continuum and the path to full integration and operations at scale across the NAS.I28 will leverage public-private partnerships to identify key locations and use cases of interest to AAM industry stakeholders while promoting an all-hands-on deck approach to ensure the necessary steps are taken to enable these operations.Leveraging lessons learned from OEMs and/or operators conducting individual EIS building block operations,I28 operations are expected to be larger in scale than initial EIS operations.I28 is intended to result in“leave behind”processes,infrastructure,procedures,and local knowledge at the key site(s).Additionally,the collective experience gained through the I28 initiative is expected to support expanded operations in other areas of the country.Repeatable Implementation Methodology The I28 implementation approach includes documenting steps and protocols and collecting data over the course of the effort to develop a repeatable methodology,including processes,procedures,and mechanisms,for expanding AAM operations to other locations across the NAS.This methodology will be used as a guide for future sites to collaborate with the FAA and other stakeholders to streamline implementation of AAM solutions.The FAA will also leverage the I28 efforts,as well as the EIS building blocks,in its ongoing work to evolve and advance AAM into the future.6 ADVANCED AIR MOBILITY(AAM)IMPLEMENTATION PLAN,VERSION 1.0 3 Implementation Plan Overview This AAM Implementation Plan is a living document that will guide implementation efforts and mature as the FAA works with stakeholders to refine and execute AAM implementation strategies.It will be updated periodically to reflect the continued plans and progress with AAM integration,roadmaps,and schedules for I28 and beyond as work continues to advance towards the mature state vision of AAM operations across the NAS.Version 1.0 provides details for the near-term I28 initiative,which will enable a repeatable AAM ecosystem at key locations based on information known to date.The evolution of AAM beyond I28 is also previewed.Version 1.0 specifically addresses the following:I28 Key Site Operations o Description of the operating environment in 2028 based on assumptions and expectations of AAM aircraft and operations,including a scenario thread for a generic key site location o Overarching framework that FAA stakeholders can use to identify and work through key challenge areas,executing to a common vision I28 Workstreams o Holistic approach to the required efforts,both internal and external to the FAA,needed to meet I28 goals(presented in Section 2)o Descriptions of work completed to date and gaps to be addressed in Certification,Airspace and Air Traffic Management,Infrastructure,Environment,Hazardous Materials Safety,and Community Engagement I28 Integrated Master Schedule o Detailed schedule across workstream focus areas that supports I28 operations and leave behind processes o Tool for tracking the milestones of internal and external stakeholders(e.g.,tribal/state/local government,and industry)who manage their own activities relevant to implementation at specific site(s)AAM Evolution Framework o High-level view of the evolution of AAM operations and an associated framework for the continued development and commitments that are needed to advance AAM integration in the NAS 7 ADVANCED AIR MOBILITY(AAM)IMPLEMENTATION PLAN,VERSION 1.0 4 Innovate28 Key Site Operations The I28 initiative envisions a near-term AAM operational ecosystem that has advanced from EIS at various locations to substantive presence at locations of interest.Since AAM aircraft are currently undergoing or are being planned to undergo the certification process,and specific operational needs are still being defined,it is necessary to make assumptions as to how the AAM industry will operate and what the supporting capabilities will be in 2028.The I28 key site operations presented here are based on industry and FAA projections on the state of technology development,air and ground supporting infrastructure and services,and other capabilities.These assumptions will continue to be updated in future versions of this document as the industry advances and regulations are developed.The following addresses the assumptions and expectations about AAM aircraft with respect to certification and operating characteristics.I28 AAM operations are then described in the context of the operating environment,including flight operations,airspace usage and route structure,air traffic control(ATC)services,and infrastructure.A scenario thread is also presented for an I28 AAM operation.4.1 AAM Aircraft For I28,AAM aircraft will be authorized for piloted operations and will transport passengers and/or cargo within the limits of the aircraft and certification regulations.The aircraft are expected to range in size from single passenger to larger occupancy shuttles,and employ new means of propulsion(e.g.,electric motors,hydrogen fuel,hybrid designs).Many are capable of vertical takeoff and landing(VTOL)or short takeoff and landing(STOL)operations and quickly transition to fixed-wing operation after takeoff.It is assumed wake characteristics will be known,including the impacts of wake from other aircraft on AAM aircraft and an AAM aircrafts own wake generation.AAM aircraft are expected to be type certificated as special class under 14 Code of Federal Regulations(CFR)21.17(b).Because these aircraft have novel airframes and powerplants,the FAA is using many of the performance-based regulations in 14 CFR part 23,Airworthiness Standards:Normal Category Airplanes,for the certification basis.AAM commercial operators are expected to be certified to operate under 14 CFR part 135,Operating Requirements:Commuter and on Demand Operations and Rules Governing Persons on Board Such Aircraft.Pilots of powered lift aircraft are expected to be rated(type rated as required)for each powered lift aircraft they fly,and they will be required to meet updated qualification requirements for operating under part 135.8 ADVANCED AIR MOBILITY(AAM)IMPLEMENTATION PLAN,VERSION 1.0 AAM aircraft are expected to operate under part 135,including seeking FAA approval for the carriage of dangerous goods and hazardous materials,consistent with the aircrafts type certificated operating weight to include passenger carriage or cargo capability and their frequency of operations.These operations must be part of the operators FAA approved Dangerous Goods program and further authorized within the operators Operations Specifications.4.2 AAM Operations The descriptions of I28 AAM operations in this section are agnostic to location.As key sites are identified,site-specific airspace and air traffic management(ATM)solutions will be developed for operations within defined geographical areas based on AAM operator use cases.Airspace Usage and Route Structure AAM operators are expected to comply with existing communication,navigation,and surveillance(CNS)requirements for the airspace in which they will operate.For I28,the expectation is that the aircraft will operate from the surface to 4000 above ground level in urban and metropolitan areas,and in relatively close proximity to or directly on airports.This means that AAM aircraft will operate predominately in or around Class B and C airspace.To operate within Class B airspace,pilots must receive ATC clearance,and aircraft are required to be equipped with an operating two-way radio,Automatic Dependent Surveillance Broadcast(ADS-B)Out,suitable navigation capability,and an operable transponder with altitude reporting capability.Initial AAM aircraft operations are generally expected to operate in compliance with Visual Flight Rules(VFR)weather minima in visual meteorological conditions(VMC).VFR aircraft operating within Class B airspace receive separation services from ATC.VFR aircraft may obtain an ATC clearance to transit Class B airspace,if needed,however,the FAA encourages VFR pilots to operate above or below,or transit Class B airspace using established VFR corridors.To operate within Class C airspace,pilots must initiate two-way radio communications prior to entry and maintain communications while in the airspace.They must also be equipped with a two-way radio and an operable transponder with altitude reporting capability.The addition of AAM operations will add to the already busy traffic levels of Class B and C airspace.In cases where existing VFR procedures do not meet the needs of air traffic facilities or AAM operators,special agreements or coordination may need to occur to 9 ADVANCED AIR MOBILITY(AAM)IMPLEMENTATION PLAN,VERSION 1.0 accommodate the increase in traffic levels.Ideally,agreements made at the local level will reduce ATC workload.Charted routes will be the primary routing structure used by AAM aircraft.This approach enables the FAA to develop routes that accommodate AAM operator needs while leveraging the existing design and charting processes.The development of airspace route structures for I28 operations will consider design standards based on 14 CFR parts 135 and 91,General Operating and Flight Rules,local procedures,terrain,and traffic flows.Pilot adherence to charted I28 routes and the recommended altitudes or flight ceilings associated with them are voluntary.However,ATC may assign charted routes and altitudes where pilot compliance is required,provided such procedures are called for in specific FAA-operator Letters of Agreement(LOAs),or are necessitated by traffic density and/or safety considerations.ATC may also restrict operations within designated operating zones when certain criteria are met,and as requested by the appropriate authorities.Noise and other environmental considerations are accounted for in the airspace design.Changes to airspace design and/or new routes will likely require the FAA to conduct environmental review and community outreach.I28 AAM routes will be designed for use in VFR conditions only,and where possible,use existing or modified low altitude VFR routes and constructs.While these routing constructs do not inherently provide separation or segregation of participating AAM traffic,they are developed to assist pilots in avoiding major controlled traffic flows.The routes1 may include:VFR flyways-General flight paths not defined as a specific course,for use by pilots in planning flights into,out of,through or near complex terminal airspace to avoid Class B airspace.An ATC clearance is not required to fly these routes.VFR corridors-Airspace through Class B airspace,with defined vertical and lateral boundaries,in which aircraft may operate without an ATC clearance or communication with ATC.1 https:/www.faa.gov/air_traffic/publications/atpubs/aim_html/chap3_section_5.html 10 ADVANCED AIR MOBILITY(AAM)IMPLEMENTATION PLAN,VERSION 1.0 VFR transition routes-Specific flight courses depicted on a terminal area chart for transiting a specific Class B airspace.These routes include specific ATCassigned altitudes,and pilots must obtain an ATC clearance prior to entering Class B airspace on the route.Special flight rule areas-Airspace of defined dimensions,above land areas or territorial waters,within which the flight of aircraft is subject to the rules set forth in 14 CFR Part 93,unless otherwise authorized by ATC.I28 AAM routes may include non-published routes.They may also require development of new routes.More information is needed to make this determination;it may be a combination of existing and new route structures until a specific AAM route process can be developed.It is important to note,however,that no unique AAM airspace structures(e.g.,dedicated AAM airspace corridors)or procedures are expected to be implemented by this 2028 timeframe.Efforts will be made when developing and designating AAM routes to ensure,to the extent possible,that the flow of AAM traffic does not negatively impact or interfere with other air traffic flows or other airspace available to ATC today.In some cases,this may be unavoidable,and operational efficiency will need to be considered.As previously noted,these routing constructs do not inherently provide separation or segregation of AAM traffic,therefore see-and-avoid will continue to be the primary means of aircraft separation.Air Traffic Control Services For I28,ATC services will be provided to AAM operators as needed or required and are defined in FAA regulations,directives,and agreements(e.g.,FAA Order Joint Order(JO)7110.65,Air Traffic Control,LOAs,Memorandums of Understanding(MOU),Notices to Air Missions(NOTAM),and Advisory Circulars(AC).AAM operations may require an LOA covering local procedures or routes,establishment of reserved discrete beacon codes,and use of abbreviated call signs.The following lists the expectations of ATC and OEMs/operators with respect to operations at designated key site locations.AAM operators comply with the appropriate CFR pertaining to ATC or apply for a waiver/exemption.AAM operations are expected to be conducted with flight schedules that are predetermined.Schedules are provided in advance of operations and coordinated with local ATC and all other identified stakeholders.The pilot has two-way radio communication with ATC when required.VFR aircraft operating within Class B airspace receive mandatory traffic advisories and safety alerts,as well as separation services where required.11 ADVANCED AIR MOBILITY(AAM)IMPLEMENTATION PLAN,VERSION 1.0 VFR aircraft operating in Class C airspace receive sequencing services and ATC separates IFR aircraft from the VFR aircraft.VFR aircraft receive traffic advisories and safety alerts.VFR pilots retain responsibility for their separation.In other airspace,ATC provides oversight with traffic advisories and safety alerts,but the pilot is responsible for separation.AAM aircraft operators are not guaranteed ATC flight following services outside of Class B,C,or D airspace where mandatory air traffic services are not required.Air traffic automation is as it currently exists.o There are no expected major changes to ATC automation systems within the 2025 to 2028 timeframe to support I28 operations.Third-party service providers may support non-safety critical aspects of operations(e.g.,operator scheduling of flights),but not substitute for ATC services where required by rule.Existing communication methods are used for pilot-controller communications for AAM VFR operations.Infrastructure Initial AAM operations in the 2025-2028 timeframe are expected to primarily use existing airports and heliports(with modification where required to meet FAAs interim guidance for vertiport design).Greenfield or infill(repurposed)development for new vertiports is also expected to connect operations to destinations near a city center or other preferred locations.It is unlikely,but possible,that specially built vertiports will be available in this timeframe.Modifications may be required for existing ground and air infrastructure due to the nature of these new aircraft.For example,if heliports are used as vertiports,they require the following infrastructure to successfully operate in the 2025-2028 time:Adequate AAM aircraft parking zones for loading/unloading.An efficient vertiport has parking zones that are separate from the“pad”that is used for takeoff and landing.Separate parking zones allow for safe entrance and egress of passengers.They also allow for parking of vehicles waiting for demand to materialize.Infrastructure sizing,dimensional geometry and load bearing requirements modified to comply with FAA Engineering Brief(EB)#105,Vertiport Design(September 21,2022).The dimensional and sizing requirements for vertiport landing and safety areas may warrant differences from heliports based on the design and performance characteristics of AAM aircraft.Charging stations.Safe rapid charging stations for electric batteries are present at vertiports as well as adequate cooling stations and hazardous materials(HazMat)lockers/storage for batteries and fire suppression for battery fires.Sufficient amperage is available to reduce recharging time to the minimum.12 ADVANCED AIR MOBILITY(AAM)IMPLEMENTATION PLAN,VERSION 1.0 Weather station.The vertiport has a weather station,possibly an Automated Surface Observing System(ASOS)or Automated Weather Observing System(AWOS),if it is remote from an airport.AAM pilots need to know wind speed and direction,as well as visibility,when planning an arrival or departure.Vertiports co-located with an airport can use the airports weather system.Fire management services.The vertiport has access to fire management services with personnel trained in handling electric/hydrogen fueled fires.New vertiport facilities follow the guidance in FAA EB#105,Vertiport Design.FAA vertiport guidance is updated over time to address the variety of aircraft and operations seeking EIS.Airport sponsors or proponents submit a Form 7460-1,Notice of Proposed Construction or Alteration,in accordance with 14 CFR 77.9 for any proposed on-airport(or on-heliport)vertiport support infrastructure(e.g.,charging stations,fueling stations,AAM terminal).Airport sponsors with federally obligated facilities,which are airport sponsors who have accepted federal financial assistance,must also conduct proper planning activities including an update to their FAA-approved Airport Layout Plan.Sponsors of non-federally obligated facilities or proponents of a new vertiport facility not on or co-located with an existing federally obligated airport or heliport submit a Form 7480-1,Notice of Landing Area Proposal,at least 90 days in advance of the day that construction work is to begin on the landing area.This notification to the FAA is required in accordance with 14 CFR part 157,Notice of Construction,Alteration,Activation,and Deactivation of Airports.New vertiport facilities that require approval and/or funding from FAA will undergo FAA environmental review.Facilities that do not require FAA approval or funding may be expected to engage in community engagement consistent with any applicable local rules.All non-FAA stakeholders will have agreed to established criteria for ground infrastructure,including:vertiport location,charging,cooling,maintenance,security,ground safety,and parking in accordance with federal regulations where applicable.Take-off and landing from the Touchdown and Liftoff Area(TLOF)is recommended for approach and departure operations from a standalone vertiport or vertistop(vertiport with limited services).It is unlikely that AAM operators will use“hover taxi”to taxi or re-position on the airfield due to anticipated battery limitations.Security Security is a key component to the safe and secure integration of AAM.However,AAM presents unique challenges for aviation security.Therefore,a Working Group under the broader DOT-lead Interagency Working Group previously discussed was established to focus strictly on security issues to inform the whole of government strategy for addressing the integration and evolution of AAM as required in the AAM Coordination and Leadership Act.13 ADVANCED AIR MOBILITY(AAM)IMPLEMENTATION PLAN,VERSION 1.0 4.3 I28 Scenario The following provides a glimpse of what I28 might look like once an AAM aircraft has successfully completed the certification processes(including wake turbulence classification)2 and is ready to fly.This scenario sequence reflects the use of designated operating areas,to include landing and departure areas,other existing infrastructure,services,and existing policies and procedures to the degree possible.LOA negotiations between air traffic,OEMs and operators,airport operators,port authorities,emergency management services,and federal,tribal,state,and local law enforcement organizations establish the processes and procedures for safe and efficient operations.This simplified thread steps through an I28 AAM operation departing a vertiport in uncontrolled airspace and landing at a tower-controlled airport in controlled airspace:1.The pilot follows established procedures for checking weather and NOTAMs for departure,en route,and destination,and files a flight plan if required.While passengers prepare to board the AAM aircraft,the pilot conducts aircraft walkarounds,preparations,safety protocols,and departure checklists.2.Departing in uncontrolled airspace,the pilot is responsible for adhering to appropriate rules governing flight in uncontrolled airspace.The pilot announces their departure intentions over a common radio frequency and maneuvers the aircraft to the takeoff location.After visually ensuring their departure area and path is clear,the pilot departs.3.The pilot is aware of the requirements for flight in controlled airspace.The aircraft enters controlled airspace by means of two-way radio communication and the appropriate clearance from ATC.Published procedures or agreements(national,local,or signatory)reduce the need for ATC communications.4.ATC issues instructions or clearances to provide separation and/or sequence the aircraft with other traffic.The pilot on board complies with instructions given by ATC or follows previously coordinated and approved instructions from the approving ATC facility(via published procedures or agreements).5.ATC transfers control and communication from controller to controller as the aircraft transits different ATC sectors.After the pilot obtains information on destination runway(s)in use,weather,and other pertinent airport information,they start their approach to the landing site or follow a previously approved approach path.The ATC tower issues a clearance to land.The pilot may ask and be permitted to land at airport areas other than runways and taxiways.2 Without wake turbulence classification,ATC is required,per FAA JO 7110.65,to provide the existing maximum wake turbulence separation in Class B airspace(10 nautical miles in front and behind the aircraft),including VFR aircraft.14 ADVANCED AIR MOBILITY(AAM)IMPLEMENTATION PLAN,VERSION 1.0 6.The pilot on board completes landing checklists,their approach,and safe landing at a new,existing,or predetermined approved landing site.The aircraft is maneuvered to the approved parking area for deplaning.7.Passengers and crew follow established procedures for deplaning the aircraft.Following prescribed security procedures,the passengers exit the area or are directed to any further security screening required to enter the secure terminal area for connecting flights.This is a high-level view of I28 operations and the near-term integration phase.The assumptions,expectations,and nature of operations will evolve over time to reflect the technology and infrastructure advancements that will provide increased scalability and types of operations.15 ADVANCED AIR MOBILITY(AAM)IMPLEMENTATION PLAN,VERSION 1.0 5 Innovate28 Workstreams The FAA is taking a holistic approach to the efforts required for AAM implementation.The I28 leadership team in the NextGen organization(ANG)established iTeams comprised of representatives across FAA lines of business(LOBs)to bring together expertise in different areas associated with AAM implementation and foster collaboration in the planning and execution of required activities.The iTeams represent the major workstreams associated with AAM implementation,including Certification,Airspace and Air Traffic Management,Infrastructure,Environment,Hazardous Materials Safety,and Community Engagement.This section addresses each workstream and describes the activities completed or underway,as well as gaps to be addressed,to support near-term I28 implementation goals.Integrating this information supports the development of a coordinated roadmap to I28 AAM operations.While the initial focus is on enabling near-term AAM operations,the work efforts and milestones within these workstreams will continue beyond I28 to support the continuous evolution of AAM.5.1 Certification The FAA has a proven track record of safely certificating and integrating new and novel design features,aircraft,and safety-enhancing technologies into the NAS.New AAM aircraft are expected to offer capabilities ranging from single-pilot,recreational eVTOL aircraft,to piloted,powered lift,multi passenger short range aircraft.The type certification of AAM aircraft is possible because the FAA can leverage the current regulatory framework,which allows development of project-specific requirements tailored to fit the unique aspects of novel designs.The flexibility to tailor requirements can come in the form of special conditions or unique airworthiness criteria under a special class,depending on the AAM design(airplane,rotorcraft,or powered lift).5.2 Operational Suitability As AAM aircraft near issuance of their Type Certificate,the OEM will engage with multiple boards within the FAAs Flight Standards Service(AFX)to conduct operational suitability reviews.It is during this process that the Flight Standardization Board will determine the aircraft type rating,the Maintenance Review Board will determine the scheduled maintenance taskings for development of an operator maintenance program,and the Flight Operations Evaluation Board will determine the requirements of the aircrafts master minimum equipment listing.The applicant may also apply for any needed regulatory exemptions during this process.16 ADVANCED AIR MOBILITY(AAM)IMPLEMENTATION PLAN,VERSION 1.0 5.2.1 Operations Certification To satisfy regulatory responsibilities and promote convergence,AAM industry engagement concerning operations certification will resemble a mix of traditional aviation with one-on-one engagement combined with utilization of existing and/or new forums that invite FAA-industry(e.g.,standards development organizations)collaboration.In other words,the FAA will use normal processes with a mix of one-on-one outreach with individual applicants,and larger groups via forums to achieve a successful collaboration.This is a key procedural step in setting common expectations across the industry.The FAA is engaged in rulemaking to enable AAM operations.The efforts are currently oriented around piloted operations,and in the interim the agency expects to use waivers,deviations,and exemptions as appropriate for initial operations.For AAM operations to be successful in 2028,it is important to connect,as seamlessly as possible,the interim methods with proposed rulemaking(and an overall framework,including external and internal guidance)as operational experience accrues.Rulemaking Activities Integration of Powered Lift:Pilot Certification and Operations:Publication of a Notice of Proposed Rulemaking(NPRM)is expected in June 2023.This action proposes an SFAR for alternate eligibility requirements to safely certificate initial groups of powered lift pilots,as well as determine which operating rules to apply to powered lift aircraft on a temporary basis to enable the FAA to gather additional information and determine the most appropriate permanent rulemaking path for these aircraft.Recognition of Pilot in Command Experience in the Military and Air Carrier Operations:The final rule was published on September 21,2022.This action extended the 500-hour credit military pilots of fixed-wing airplanes can use towards the 1,000 hours of air carrier experience to pilots of powered lift aircraft operations.This allows credit for select military time in a powered lift aircraft flown in horizontal flight towards the 250 hours of airplane time as pilot in command(PIC),or second in command performing the duties of PIC,required for an airline transport pilot certificate.17 ADVANCED AIR MOBILITY(AAM)IMPLEMENTATION PLAN,VERSION 1.0 Update to Air Carrier Definitions:This NPRM was published on December 7,2022,with comments submitted by February 6,2023.This action proposes to amend the regulatory definitions of certain air carrier and commercial operations.The proposed rule adds powered lift to these definitions to ensure the appropriate sets of rules apply to air carriers and certain commercial operators operations of aircraft that FAA regulations define as powered lift.The FAA also proposes to update certain basic requirements that apply to air carrier oversight,such as the contents of operations specifications and the qualifications applicable to certain management personnel.In addition,this action proposes to apply the rules for commercial air tours to powered lift.This proposed rule is an important step in the FAAs integration of this new entrant aircraft in the NAS.Airman Certification Standards and Practical Test Standards for Airmen;Incorporation by Reference:This NPRM was published on December 12,2022,with comments submitted by February 10,2023.This action proposes to revise certain regulations governing airman certification.Specifically,the FAA Airman Certification Standards and Practical Test Standards are currently utilized as the testing standard for practical tests and proficiency checks for persons seeking or holding an airman certificate or rating.The FAA proposes to incorporate these Airman Certification Standards and Practical Test Standards by reference into the certification requirements for pilots,flight instructors,flight engineers,aircraft dispatchers,and parachute riggers.The following list includes examples of guidance that may need to be developed or updated in support of AAM integration rulemaking activities to describe standards and means of compliance,as well as promote good safety practices.This list is not all-inclusive.Advisory Circulars Development of standards and practices for Flight Standardization Boards and Maintenance Review Boards Processes and Procedures for issuance of 14 CFR part 135 Air Operator Certificates Amendment of internal FAA Orders and related change management FAA Order 8900.1 Flight Standards Information Management System FAA Order 8260-series Development of training for workforce to support AAM oversight and certification Development of and guidance related to the issuance of Operations Specifications(OpSpecs),Management Specifications(MSpecs),Training Specifications(TSpecs),and Letters of Authorization as appropriate,for AAM Operations Guidance and procedures for the issuance of licensing and certification of industry personnel Aeronautical Information Manual(AIM)and Aeronautical Information Publication(AIP)Pilots Handbook of Aeronautical Knowledge Flight Standards infrastructure guidance 18 ADVANCED AIR MOBILITY(AAM)IMPLEMENTATION PLAN,VERSION 1.0 Flight Standards is working to further adapt its organizational structure for both conventional and emerging operations.Aircraft capabilities and procedures(defined by manufacturers)are inextricably linked with operational approvals and personnel training,along with procedures for flight operations and continued airworthiness.As such,Flight Standards will continue to work closely with the FAAs Aircraft Certification Service(AIR)as part of an integrated oversight strategy by dovetailing its efforts with the certification of AAM aircraft and the issuance of Type Certificates(and continuous operational safety after entry into service).Flight Standards is evolving its tools used for coordination of manufacturer/operator applications to increase efficiencies and enhance communications.For simple certifications,some steps can be condensed or eliminated.Some applicants may lack a basic understanding of what is required for certification.Other applicants may propose a complex operation but are well prepared and knowledgeable.Because of the variety in proposed operations and differences in applicant knowledge,processes will be thorough and flexible enough to apply to all possibilities.Industry applicants have the responsibility for compliance.Flight Standards will ensure applicants are aware of applicable regulations,standards,and requirements.Flight Standards is making improvements to the prioritization and processing of certification of new operators and repair stations.This includes exploring various ways to reduce wait times,while ensuring resources available to support valid business ventures.Similarly,as with conventional aviation and drone operations,surveillance and oversight will be scaled taking a risk-based approach,ensuring application of the right level of FAA(and industry)resources.For cases where direct oversight is not applied as frequently,the FAA will work with industry on broad safety promotion and compliance activities.5.2.2 Aircraft Certification Aircraft certification is a process through which the FAA approves the design,production,and airworthiness of aircraft in the U.S.The certification process ensures that an aircraft meets minimum safety and environmental standards set by the FAA before it can be operated commercially or privately in the U.S.airspace.The certification process involves several stages,including design approval,production approval,and airworthiness approval.Design approval involves reviewing and approving an aircrafts proposed design,including its systems,structures,and performance capabilities.Production approval ensures that an aircraft is built according to the approved design and meets the FAAs quality standards.Finally,airworthiness certification ensures that the aircraft is in a condition for safe operation and conforms to its approved design.Currently,AIR is engaged with over two dozen manufacturers targeting the development of novel aircraft and propulsion technologies that underlie the design and operation of AAM aircraft.While some of these companies are relatively early in their technology development,vehicle design,and operations concepts,and in their readiness to engage in a new type certification program,nearly half of the companies have reached a level of 19 ADVANCED AIR MOBILITY(AAM)IMPLEMENTATION PLAN,VERSION 1.0 maturity and development to have manufactured flying testbed prototypes.Their progress reflects positively on readiness to advance in the type certification process.AIR is also currently working to define clear certification requirements and pathways to showing compliance for several novel aircraft technologies that are anticipated to be key to the future of AAM design and operations.These technologies include electric propulsion,large lithium-ion battery arrays,hydrogen fuel cell systems for electrical energy supply,distributed propulsion systems with highly integrated flight and propulsion controls,increased automation,and VTOL capabilities for winged aircraft.The FAA determined that its existing aircraft certification processes are sufficient to type certificate powered lift as a special class under 14 CFR 21.17(b).The special class process allows the FAA to address the novel features of unique and nonconventional aircraft without the need for additional processes such as special conditions or exemptions that would be required if the FAA used existing airworthiness standards.Under the special class process,the FAA designates or creates applicable airworthiness requirements as the certification basis for each aircraft design,including its engines and propellers.This designation and creation of applicable airworthiness requirements includes appropriate requirements from the existing airworthiness standards applicable to normal category and transport category airplanes,normal category and transport category rotorcraft,aircraft engines and propellers(parts 23,25,27,29,33,and 35),and it may also include unique airworthiness criteria developed specifically for the individual product.In order to move forward to a more streamlined certification process,the FAA has proposed an update and expansion of the requirements for Safety Management Systems(SMS)and requires 14 CFR parts 5,Safety Management Systems,21,Certification Procedures for Products and Articles,119,Certification:Air Carriers and Commercial Operators,91,and 135 certificate holders to develop and implement an SMS.The FAA also proposed this rule in part to address a Congressional mandate as well as recommendations from the National Transportation Safety Board(NTSB)and two Aviation Rulemaking Committees(ARCs).The Notice of Proposed Rulemaking on Safety Management Systems was published in the Federal Register on January 11,2023,and the comment period closed on April 11,2023.Acceptable Means of Compliance A key tenet of the FAAs approach to AAM certification is that an applicants means of demonstrating compliance with the airworthiness requirements for its proposed design(i.e.,the applicants Means of Compliance(MOC)must be accepted by the FAA.Although the FAA is leveraging the performance-based requirements from 14 CFR part 23 as modified by amendment 23-64,the consensus standards that the FAA has accepted as MOCs for normal category airplanes may not be appropriate for a particular proposed AAM due to its configuration,complexity,or novel technology.Work is still in progress to provide applicants with standardized MOCs that consider configuration differences,complexity,and novel design.20 ADVANCED AIR MOBILITY(AAM)IMPLEMENTATION PLAN,VERSION 1.0 Noise Considerations Aviation noise remains one of the primary environmental challenges to the continued growth of aviation.Pursuant to 49 U.S.Code(U.S.C.)44715,the FAA has the responsibility to“protect the public health and welfare from aircraft noise.”This responsibility includes broad authority to adopt regulations and noise standards as necessary.The FAA regulates the maximum noise level that an individual civil aircraft can emit through requiring aircraft to comply with certain noise limits.These limits and associated testing standards are found in 14 CFR part 36,Noise Standards:Aircraft Type and Airworthiness Certification.Any applicant seeking a type certificate for their aircraft in the U.S.must comply with noise standard requirements as a part of the type certification process.3 In addition,the FAA must complete a Noise Control Act finding,which ensures that the latest safe and airworthy noise reduction technology is incorporated into aircraft design and enables the reductions in noise experienced by communities.When establishing the noise certification basis for AAM,the FAA will examine each application and determine whether existing part 36 requirements are appropriate as a noise certification basis,as is done for all applicants whose aircraft are subject to noise certification.If the current standards cannot be appropriately applied,the FAA may promulgate a rule of particular applicability for that applicants aircraft model to establish a noise certification basis.Such a rule will require environmental review pursuant to the National Environmental Policy Act(NEPA).To date,for the one aircraft presented for noise certification,the FAA has determined that the existing testing procedures and requirements in part 36 are applicable.The FAA is currently evaluating other applications and will determine the noise certification basis for them.5.3 Airspace and Air Traffic Management AAM infrastructure,automation,and traffic management approaches will evolve over time as the AAM operational tempo increases in airspace across the NAS.AAM aircraft will be integrated at greater scale with commercial and general aviation(GA)traffic,as well as other low-altitude airspace users,such as recreational and commercial small unmanned aircraft systems or drones.In the near-term for I28,however,these interactions are minimized and thus can be managed with existing ATC tools,procedures,and protocols.AAM aircraft are expected to be operating with a pilot on board and under VFR in VMC conditions;it is likely these aircraft will be treated as any other fixed wing/rotorcraft operating under VFR conditions,to the extent they are able to comply with existing rules,regulations,and procedures.3 If the AAM aircraft is non-electric and has a thrust of 6000lbs,engine emissions regulations could also possibly be applicable.21 ADVANCED AIR MOBILITY(AAM)IMPLEMENTATION PLAN,VERSION 1.0 The FAAs Air Traffic Organization(ATO)leads the planning,development,and implementation of airspace and ATM solutions,including development of airspace and route structures,policies,procedures,and ATC training.For I28,the ATO developed a general approach for airspace route design and usage,and traffic management that supports AAM VFR operations in the near-term(see Section 4),including the use of existing VFR route constructs.I28 ATM processes will support a future national strategy,and supplemental directives will ensure consistency in how AAM route networks are designed.Existing mechanisms used by air traffic beyond traditional airspace classifications include the establishment of a special air traffic rule which applies within a Special Flight Rules Area(SFRA).Evaluation of these and alternative methods early in the planning process will allow the required collaboration to ensure timely resolution and publication of AAM route and network design.Depending on the volume and specific operational needs of I28 operations,local air traffic facilities may need to update their procedures,utilize existing non-rulemaking airspace strategies,and complete an analysis to determine the need for airspace changes.The air traffic planning and analysis policy uses an interdisciplinary approach to effectively manage NAS changes.This would include the development of necessary training in a training delivery plan.Sufficient time will be allotted throughout I28 development activities to ensure the necessary rulemaking or non-rulemaking activities,route publications and distribution,and training materials can be developed;and controller training can be completed to support the safe management of NAS operations.In parallel,the ATO will continue to address AAM through its ATO AAM Near-Term Operational Integration Workgroup(NTIWG),which was established in November 2021 to identify air traffic considerations and impacts for near-term operations.After concluding their review in June 2022,the NTIWG had identified 55 recommendations to help address the integration of AAM operations in the near-term.Many of the recommendations require changes to FAA policy and guidance directives including,but not be limited to:22 ADVANCED AIR MOBILITY(AAM)IMPLEMENTATION PLAN,VERSION 1.0 JO 7110.65 Air Traffic Control JO 7210.3 Facility Operation and Administration JO 7400.2 Procedures for Handling Airspace Matters The ATO also recommends a detailed policy review be conducted to determine if other associated orders and ACs need to be updated or developed.Topics that should be considered include:Wake Turbulence Categorization and impacts to operations Aircraft Certification and how that translates to ATC Service Provisions and Separation Minimum Safe Altitude as it applies to AAM Workforce and facility staffing considerations 5.4 Infrastructure AAM operations require specialized infrastructure to support the safe and efficient operation of eVTOL aircraft.This section addresses how existing infrastructure can be leveraged to support near-term operations.It also documents what has been completed to-date to enable the planning,design,and construction of new vertiports or modification of existing facilities.The FAA remains committed to fostering collaboration with industry and local stakeholders to enable vertiport construction.Additional aspects of infrastructure will need to be addressed as I28 efforts progress,including electrification to support charging of AAM aircraft and power for AAM operations.The DOT Interagency Working Group will address these and other topics not directly in the FAAs purview.5.4.1 Existing Infrastructure To enable near-term operations,operators and manufacturers desire to use existing infrastructure,including commercial service airports,underutilized GA airports,and heliports.It is likely though that existing heliports and airports will require modification or enhancements to accommodate early entry aircraft and their unique operations.Facility owners and operators should plan for dedicated takeoff and landing areas and support facilities that address the needs of eVTOL operators,including limited taxi capabilities and charging.Airport and heliport owners should engage existing and future tenants who intend to operate eVTOL aircraft to ensure planning and siting of infrastructure and equipment adequately accommodates their intended operations.Construction of on-airport vertiport facilities may require FAA notification under 14 CFR part 77,Safety,Efficient Use,and Preservation of Navigable Airspace and updates to an airports FAA approved Airport Layout Plan(for federally obligated airports).Modifications to existing federally obligated infrastructure will also undergo FAA environmental review 23 ADVANCED AIR MOBILITY(AAM)IMPLEMENTATION PLAN,VERSION 1.0 and community engagement.Facilities that do not require FAA approval or funding may be responsible for community engagement consistent with local rules.5.4.2 New Infrastructure Communities,developers,and operators may also choose to establish new vertiports,not co-located with an existing airport or heliport.State licensing and local zoning ordinances may require updates to accommodate these new types of landing facilities.Where no federal funding is used,FAA oversight and engagement with these new vertiports and their surrounding communities may be limited.Communities are encouraged to plan for vertiports capable of accommodating multiple operators that will benefit passengers.They should also plan for equitable,multimodal placement of vertiports to connect transportation systems without creating new sources of traffic congestion and parking concerns whenever possible.Construction of new infrastructure would trigger FAA notification under 14 CFR part 157.5.4.3 Vertiport-Related Research In 2019,the Office of Airports(ARP)and the Airport Technology Research and Development Branch(ATR)began a multi-year research project to support the development of vertiport standards.ATR is investigating and evaluating VTOL and STOL aircraft design and performance to develop design standards and guidance.For Phase 1,ATR completed a literature review(2021)that identified gaps in available performance data;a result of AAM company concerns about the release of proprietary information.With the help of FAAs Emerging Technology Coordination Branch(formerly known as Center for Emerging Concepts and Innovation)and other AIR offices,using existing mechanisms for communication with applicants and data protection,ATR obtained preliminary AAM aircraft data.The literature review findings,analysis of the aircraft data,and further interchange with manufacturers and operators,supported the development of interim guidance.On September 26,2022,ARP released EB#105,Vertiport Design.The EB serves as interim guidance to airport sponsors,vertiport operators,and infrastructure developers for the design of vertiports for VTOL operations,until a performance-based AC is released in 2025.The EB is prescriptive and purposely limited to address eVTOL operations using design and performance data available from VTOL aircraft manufacturers currently working toward certification.Phase 2 of the research was completed in summer 2022 and involved six hypothetical vertiport locations covering a range of diverse scenarios,including on-airport,off-airport(in close proximity to complex airport environment),urban,and rural vertiport environments.Modeling analyzed TLOF occupancy times for arrival and departure operations.The scenarios used site-specific information,allowing development of conceptual layouts for each scenario in an airport layout plan-style drawing.Phase 3 of the research(started in January 2023)included simulation exercises and operation testing with various AAM companies.The simulation exercises will support 24 ADVANCED AIR MOBILITY(AAM)IMPLEMENTATION PLAN,VERSION 1.0 preparations for on-site operational testing which will further evaluate landing precision,approach/departure profiles,rotorwash/downwash impacts,and aircraft taxiing.The FAA also has an interagency agreement with the Department of Energys National Renewable Energy Lab(NREL)to determine how aircraft electrification affects a vertiport,heliport,or airports electrical grid.The research will look at vertiport charging requirements,hazards associated with charging stations,and cybersecurity.Collaboration among FAA organizations and research branches has been key to ensuring FAA research is relevant and addresses the variety of operations anticipated for I28 and beyond.ARP receives notification of new and innovative aircraft and technology through the AIR Intake Board and other collaborative processes,and then facilitates introductions,as needed,between AIR,the manufacturer,and ATR.The FAA iTeams will continue to coordinate and collaborate on research areas of overlap.To enable near-term operations,the following areas require further research:Vertiport fire extinguishment equipment and electric aircraft firefighting tactics VTOL aircraft parking needs Vertiport signage,markings,and lighting 5.4.4 Vertiport Standards and Oversight The FAA is using existing policy,regulations,and infrastructure as a baseline for vertiport guidance and regulations development;however,it will be the responsibility of the operators,manufacturers,state and local governments,and other stakeholders to plan,develop,and enable vertiport infrastructure for I28 operations.The FAA cancelled its AC on Vertiport Design in 2010 due to a lack of commercially available aircraft.Standards are needed to address the wide variety of aircraft and operations intended under AAM.While the FAA published prescriptive interim guidance for the design of vertiports in EB#105 in September 2022,ARP plans to release a performance-based AC in 2025.Data obtained through operational testing of prototype and production VTOL and STOL aircraft will greatly influence design standards and guidance in the AC.Since AAM is constantly evolving,ARP anticipates updating the vertiport AC more frequently than other airport-related ACs.The FAA also established a cross-LOB/staff office Vertiport Process Improvement Team to identify a path forward with developing criteria and standards for processing and analyzing proposed vertiports.This team identified actions necessary to address gaps in existing policies,procedures,and standards,including but not limited to the following:25 ADVANCED AIR MOBILITY(AAM)IMPLEMENTATION PLAN,VERSION 1.0 Initiate a rulemaking project for 14 CFR parts 77,Safe,Efficient Use,and Preservation of the Navigable Airspace,and 157 to clarify applicability to vertiports and supporting infrastructure and define vertiport imaginary surfaces Review and update JO 7400.2 Airport Airspace Chapter to address vertiport infrastructure and imaginary surfaces Review and update FAA Forms 7460-1 and 7480-1 to identify and address vertiport/supporting infrastructure information and data needed for FAA processing/review Define FAAs role in vertiport inspections Existing statutory authority may limit the agencys ability to regulate(i.e.,14 CFR part 139,Certification of Airports)and fund vertiports,particularly for private-use facilities.Without certification or federal funding,facilities may not comply with FAA design standards(a current condition that exists in many heliports)or have similar safety equipment and firefighting equipment onsite like todays commercial service airports.5.5 Environment The FAA is responsible for evaluating the significance of environmental impacts for aviation operations in the U.S.and disclosing those impacts to the public.As such,to enable near-term AAM operations,the FAA will consider the impact of AAM aircraft on a variety of aspects of the human environment,including(but not limited to)noise,air quality,visual disturbances,and disruption to wildlife.The FAA has policies and practices in place to conduct environmental review for legacy aviation.However,the FAA is still evaluating how best to streamline the environmental review process for new entrants,such as AAM.The majority of questions related to compliance with environmental requirements in support of I28 remain open due to the need for additional information on what FAA approvals will be required for different aspects of the operation and any infrastructure,and what FAA offices will be responsible for such approvals.In addition,further information from manufacturers and operational data for aircraft is needed for the analysis of noise and 26 ADVANCED AIR MOBILITY(AAM)IMPLEMENTATION PLAN,VERSION 1.0 emissions impacts.In particular,in order to determine whether compliance with NEPA is required,the FAA will need to identify whether there is/are a major federal action(s)triggering NEPA.Certification of aircraft,such as AAM,is a major federal action that will trigger compliance with NEPA,however there may be other FAA actions(e.g.,approving or establishing where the AAM aircraft fly)that could trigger NEPA.For example,developing routes for AAM aircraft or introducing AAM into the NAS that will impact other flight operations may trigger NEPA.If NEPA applies,the LOB responsible for the approval will need to determine and conduct the appropriate level of environmental review(including potentially public involvement),as well as consider the need for supplementary community engagement.4 The FAAs Office of Environment and Energy(AEE)and the Office of the Chief Counsel(AGC)will provide support and advice to FAA LOBs in identifying applicable actions and determining the appropriate level of environmental review and associated public involvement and community engagement.If environmental reviews are required,the applicable LOB(s)will be responsible for planning,coordinating,and(where applicable)funding the environmental review and provide any associated public involvement and community engagement needed.5.6 Hazardous Materials Safety As AAM operations are initially expected to be conducted under 14 CFR part 135,AAM operators will be required to have hazardous materials training programs approved by the FAA;hazardous materials manuals accepted by the FAA;and Operations Specifications permitting or prohibiting accepting,handling,and transporting HazMat.These requirements apply whether or not a part 135 certificate holder chooses to transport hazardous materials.Part 135 HazMat training and manual requirements are function-based and scale to the scope and complexity of a certificate holders operation.DOT Hazardous Materials Regulations(HMR;49 CFR parts 171-185)apply to any operator transporting hazardous materials in commerce.The HMR are promulgated by the Pipeline and Hazardous Materials Safety Administration(PHMSA).Regulations applicable to aviation are promulgated in coordination with the FAA.As part of an operators SMS,safety risk assessments accounting for hazardous materials being transported,relative to a specific certificate holders system,can help to inform supplemental risk management strategies in AAM operations.4 The term public involvement exclusively refers to activities required under NEPA and other environmental laws and requirements(e.g.,scoping meetings,circulation of environmental documents for public review and comment).“Community engagement refers to agency-specific guidance that FAA employees are encouraged to use.27 ADVANCED AIR MOBILITY(AAM)IMPLEMENTATION PLAN,VERSION 1.0 5.7 Community Engagement Changes in airport operations,airspace procedures,aviation infrastructure,and technology can have effects on communities.When developing a new project or procedure that may impact the public,the FAA proactively engages with airports,communities,and elected officials to better understand community concerns about aviation noise and in some cases adjust or mitigate these concerns.With AAM,the FAA will proactively engage with airports and elected officials to ensure they understand AAM and expected operations.Currently the scope of what may need to change to accommodate the safe integration and operation of AAM operators into the airspace is evolving.The FAAs level of engagement will follow the level of change;however,given the expected scope of AAM changes,the FAA does not expect the same type of engagement that the agency conducts for major airspace changes.Engagement at the regional level is the most effective path as AAM stakeholders and the FAA consider key site locations for I28.The FAAs Community Involvement Manual provides flexible guidance and best practices applicable to all FAA actions and will be leveraged for AAM operations and I28.Additional guidance also exists specifically related to airspace procedures.While the FAA does not expect to develop new or unique agency policy,it will be important to ensure all aspects of the I28 project utilize these best practices.Elements of community engagement are already part of normal business practices for some FAA LOBs or Staff Offices.For example,compliance with NEPA and other environmental requirements often includes required public involvement elements,such as the distribution of an environmental document for public review and comment,that might be one element of a robust community engagement strategy.It is important to note that community engagement supplements but cannot substitute for these required public involvement activities.While public involvement is led by the FAA under some environmental laws or other requirements,community engagement may also be led by the proponent of the project(which may be FAA in the case of many airspace changes but can also be airport sponsors or operators).When the project proponent takes the lead on community engagement,the FAA plays an oversight role,providing advice and guidance on good community engagement practices.For I28,community engagement needs to focus on more than just airspace and it will involve DOT/FAA and other agency offices.It is important that the public understand how these new aircraft operations will impact their communities.Many other stakeholders,such as AAM operators,vertiport sponsors,and airport operators,will be part of bringing AAM to an operational reality and will have a role in community engagement.28 ADVANCED AIR MOBILITY(AAM)IMPLEMENTATION PLAN,VERSION 1.0 6 Innovate28 Integrated Schedule The Integrated Master Schedule(IMS)contains a comprehensive list of activities that must be achieved by FAA LOBs and staff offices,industry,and local governments and stakeholders to enable AAM operations at a key site.The IMS is generic for a key site and will be tailored for each individual implementation,including the I28 building blocks,as more information is available.Not all activities included in the comprehensive generic IMS will be required for every implementation,and individual implementations will require additional site-specific activities.As a result,the IMS will be iterative as the team learns from each implementation.The IMS utilizes dependencies between activities which are included in Table 1.The IMS requires further refinement both within the agency and through collaboration with external stakeholders,including industry.The following lists some considerations for the IMS as displayed in Figure 1:The Type Certification and Operational Certification paths shown in the IMS are examples for a typical OEM/operator.The certification timelines can vary significantly depending on the maturity and responsiveness of the OEM/operator.Some OEMs have already completed part(s)of the certification processes shown here.The Environmental Review timeline is based off a typical Environmental Assessment.This timeline can range significantly based on site-specific factors that can either reduce the Environmental Review to a Categorical Exclusion when the proposed federal action does not individually or cumulatively have a significant effect on the human environment and the proposed action falls within the scope of the approved agency categorical exclusions;or increase it to an Environmental Impact Statement which is required under NEPA when a proposed federal action significantly affects the human environment.The timelines of some activities could potentially be significantly reduced or eliminated if it is determined that existing infrastructure can be leveraged with little to no modification.The final state of the IMS will list a duration and point of contact for each activity so its status can be tracked at routine check-in meetings.29 ADVANCED AIR MOBILITY(AAM)IMPLEMENTATION PLAN,VERSION 1.0 Figure 1.Integrated Master Schedule Version 1.0 ImplementationAir Traffic Procedure DevelopmentScopingEvaluationCommunity/Stakeholder EngagementImplementationController TrainingReview and update Air Traffic PolicyWake Separation DeterminationNational Vertiport ActivitiesState Vertiport ActivitiesType CertificationPost Cert ActivitiesLocal On-Airport/Federally Funded Vertiport ActivitiesType Cert IssuedOps Cert IssuedOperational Readiness DecisionNote:The IMS is a depiction of the activities that may be required to allow an operator to enter into service at a location.Depending on the scope and concept of use for their planned operation,not all activities may be required for every implementation;the duration of a step may vary by project as well.Some companies have already completed some of these activities.30 ADVANCED AIR MOBILITY(AAM)IMPLEMENTATION PLAN,VERSION 1.0 Table 1.Detailed List of Activities in the Integrated Master Schedule Version 1.0 High-level Activity Sub-activities Operational Certification Operational Suitability Flight Standardization Board(FSB)and Report(FSBR)Maintenance Review Board(MRB)and Report(MRBR)Conduct Flight Operations Evaluation Board(FOEB)Issue Master Minimum Equipment Listing(MMEL)Review and Concur with all Instructions for Continued Airworthiness(ICAs)Review and Concur with all Flight Manuals and Flight Manual Supplements Operational Approval(Part 135)Phase 1:Pre-application Phase 2:Formal Application Phase 3:Design Assessment Phase 4:Performance Assessment Phase 5:Administrative Functions Review and Update Air Traffic Policy 7110.65 Document Change Proposal(DCP)Review and Update 7400.2 Airport Airspace Chapter Review and update FAA Forms 7460-1 and 7480-1 Spectrum Analysis Controller Training Develop training plan Schedule controller training Train controllers Develop and Implement Air Traffic Procedure(s)Phase 1:Scoping Phase 2:Procedure Solution Development(6 months or more)Initial design activities,refinement,and validation Initial Environmental look Phase 3:Evaluation(12-18 months)SMS/SRM Panel and Process Environmental Review Phase 4:Implementation Finalize SOP and LOA Procedure processing and publication,including flight inspection Charting Aircraft type automation update Phase 5:Post-Implementation Wake Separation Determination Develop performance data package(e.g.weights,aircraft specifications,flight command/control performance,etc.)Wake Separation Assessment Update 7360.1 Community/Stakeholder Engagement Messaging development Website development Continued Regional Office Community Engagement(local officials,community roundtables)Airspace Implementation Community Engagement Airline Crew Preparation Identify,vet,and train crew Site-specific AAM forecast Rulemaking Rulemaking for Pilot Training Powered-lift NPRM High-level Activity Sub-activities Select Site Local discussions and buy-in National Vertiport Activities Vertiport Operational Testing data collection and analysis Vertiport AC Vertiport AC Rulemaking project for Part 77 and 157 State Vertiport Activities Update zoning ordinances Update licensing requirements to address vertiports State environmental policy review Local On-Airport/Federally Funded Vertiport Activities Airport planning activities Airport Layout Plan(ALP)development,submission,and approval process Section 163 review NEPA Environmental Review Site Engineering 7460 process Receive state licensing Construction Publication and charting Local Off-Airport/non-Federally Funded Vertiport Activities 7480 process Receive state licensing Design and Construction Type Certification Conceptual Design Process Orientation Pre-Project Guidance Familiarization Briefing Application Requirements Definition Application for TC and PC Establishment of TC Project Certification Project Notification Form the Certification Team Certification Basis and DDS Requirements Definition The Preliminary TCB Meeting Issue Paper Identification G-1 Certification Basis Notice of proposed airworthiness criteria G-2 Detailed Design Standards G-3 Noise Standards Mean/Method of Compliance Compliance Planning Review and Acceptance of Certification Plans Implementation Conformity Inspections Detail-level compliance plan Product-level compliance plan Safety Review Board TIA&Conformity Inspection Flight Tests Type Inspection Report Final Type Certification Board Issue Type Certificate Post Certification Activities 31 ADVANCED AIR MOBILITY(AAM)IMPLEMENTATION PLAN,VERSION 1.0 7 AAM Evolution Framework The FAAs approach to supporting the operationalization of AAM encompasses a series of incremental changes and advancements to the regulatory,technological,and operational frameworks that govern the NAS.This approach aims to ensure safety,while also facilitating efficiency and innovation in the AAM industry and will result in a continuum of AAM capabilities that evolves over time as the tempo of operations increases,driving the need for more advanced supporting infrastructure,regulations,and processes.This will allow the collection of early benefits and lessons learned while maintaining progress toward the fully mature state of AAM.The agency is working on a regulatory framework that will allow AAM aircraft to be fully integrated into the airspace and operate alongside traditional aircraft in the near-term and beyond.The FAA and industry are developing the necessary technologies to support AAM operations,including aircraft and traffic management systems,communication networks,and autonomous capabilities.Finally,the FAA is working to establish operational frameworks that ensure the safe integration of AAM aircraft into the NAS,including training pilots,air traffic controllers,and other stakeholders on new procedures and regulations.This evolutionary approach to AAM provides advantages.By initially supporting lower complexity operations in the near-term,as with I28,implementation can be achieved by maximizing the use of current capabilities that meet performance requirements and do not require full-scale regulatory and operational infrastructure changes.With increased tempo,AAM operations will evolve through changes to governing regulations augmented by AAM infrastructure,automation,and cooperative traffic management practices supported by third party services.The evolution to a collaborative,information-rich,data-sharing environment will require new technologies and capabilities.AAM operators and other stakeholders will share information with the FAA having on-demand access to information as needed.The FAAs ANG organization developed an initial AAM framework that categorizes the evolving phases of AAM and provides context on the AAM roadmap to operationalization.The framework describes the anticipated operational capabilities for both FAA and industry stakeholders as the AAM ecosystem develops and matures over time.The framework also serves to identify key areas that require prioritization and coordination among the various stakeholders across the AAM ecosystem.The framework will inform FAA efforts,but also can be used by industry and other government agencies.AAM Coordination Areas The AAM framework consists of five high-level coordination areas,shown in Table 2,within which key AAM capabilities pertaining to both FAA and industry stakeholders are highlighted.AAM capabilities are expected to progress independently toward a mature state.The pace of development may vary within and between coordination areas.Maturity is capability dependent,and not bound by a specific timeline.Regional maturity rates may vary as well,with some communities embracing AAM operations more rapidly than others.32 ADVANCED AIR MOBILITY(AAM)IMPLEMENTATION PLAN,VERSION 1.0 It should be noted that community engagement,although not shown here,will be an integral and required step for each coordination area.Table 2.AAM Coordination Areas Area Considerations for FAA and Industry Stakeholders Aircraft System Aircraft,equipment,automation,certification Infrastructure Facilities,data systems related standards,federated networks,CNS Operations Operational density and modes,procedures,pilot knowledge and training Airspace Routes,waivers,cooperative areas,charting and publication ATC Procedures Standard operating procedures,LOAs,public-private responsibilities AAM Maturity Levels The evolution of capabilities addresses initial,intermediate,and mature states of AAM,and is described across six maturity levels(0-5).Each maturity level is characterized by a set of expected outcomes,as shown in Table 3.One or more triggering events indicate progression from one maturity level to the next.33 ADVANCED AIR MOBILITY(AAM)IMPLEMENTATION PLAN,VERSION 1.0 Table 3.AAM Maturity Levels Level Description Trigger Events(for reaching level)0 Late-stage certification testing in limited environments,aircraft certification testing and operational evaluations with conforming prototypes and existing rules/procedures,and early industry development and prototyping.1 Exploratory operations of minimal density and complexity,type certified aircraft,early FAA procedures development,and initial Provider of Services for UAM(PSU)services.Completion of relevant NPRMs and rulemaking to allow for vehicle type certification,initial public standards to support data exchanges between industry participants and the FAA.2 Low-density scheduled commercial operations in urban areas and around airports,as well as an established federated service network*with several PSUs and Supplementary Data Service Providers(SDSPs).Designated cooperative airspace is limited(see UAM ConOps,Version 2.0).*A federated service network is one that is provided and supported by the operators and third-party service providers to exchange the information and agreements needed for FAA-approved cooperative operating practices.Increased operational density,new operational modes(e.g.,remotely piloted),and the evaluation of cooperative airspace and a federated service network with multiple operating PSUs.3 Medium-density scheduled and unscheduled commercial operations using an increased number of vertiports and routes in specific geographical areas that make continued use of limited,designated cooperative airspace.Established PSUs and federated service networks support increased levels of automation and instances of remotely piloted aircraft with a safety pilot on board.Continued evolution of the modes of operations,implementation of designated cooperative airspace in more geographical areas,and the establishment of certification standards for automated and remotely operated large aircraft.4 Medium-density scheduled and unscheduled commercial operations in an AAM network that make widespread use of cooperative airspace.Fully remotely-piloted operations are supported.Certification of fully remote piloted aircraft and the availability of enhanced CNS capabilities that can support long distance and fully remote operations,complete implementation of new regulatory frameworks,widespread implementation of cooperative airspace and vertiports,and the ability to support operations in instrument meteorological conditions(IMC).5 Mature AAM ecosystem,characterized by high density scheduled,unscheduled,and on-demand operations that are geographically dispersed and served by aircraft able to operate autonomously.Certification of fully autonomous aircraft and the satisfactory performance of highly integrated automation within the federated service network.34 ADVANCED AIR MOBILITY(AAM)IMPLEMENTATION PLAN,VERSION 1.0 FAA and Industry Coordination The AAM evolution framework embraces independent advancement within coordination areas,but also acknowledges the need for coordination across the areas for the AAM ecosystem to come to fruition.It considers both FAA and industry activities and capabilities to support AAM maturation.Rulemaking The FAA uses the same rulemaking process for AAM operations as it does for other aviation-related regulations.To carry out its responsibilities,the FAA must issue regulations that are clear and provide direction to the aviation industry and the public.Through the rulemaking process,the FAA engages with stakeholders,including industry groups,pilots,and the public,to develop regulations that are informed by their inputs.The process provides an opportunity for all interested parties to provide comments and feedback on proposed regulations,which helps to ensure that the final regulations are effective,practical,and above all,ensure safety.Standards Development Industry stakeholders,including aircraft manufacturers,operators,and infrastructure providers,play a critical role in developing standards for AAM operations.Industry-driven standards are essential to ensure that AAM vehicles and infrastructure are safe,reliable,and interoperable.Long lead times and the level of stakeholder participation required to develop standards is a high priority area that requires establishing relationships among all the stakeholders,identifying standards development needs,and generating multi-year plans to address those needs and associated actions.Technology Development and Deployment Industrys development of technology often moves faster than the regulations addressing the use of the technologies.The FAA needs to establish and maintain close ties with industry to ensure that emerging technologies are designed with safety and NAS integration in mind and that regulations do not unduly constrain technology and market development.This includes the need for industry to consider the complexity of aviation operations and human factors,especially when proposing highly automated solutions.Additionally,the FAA needs to work closely with foreign regulatory counterparts and Air Navigation Service Providers to align and harmonize AAM-related regulations,policies and procedures,as applicable,given this sectors global,entrepreneurial,and innovative ecosystem.The long lead time for development and deployment of FAA capabilities also makes identifying FAA technology/capability requirements and establishing roadmaps for acquisition and development a high priority activity.35 ADVANCED AIR MOBILITY(AAM)IMPLEMENTATION PLAN,VERSION 1.0 Network Development The mature state vision for AAM involves industry-built networks for data exchange to support many functions that the FAA has traditionally performed,including aspects of airspace management.These networks and the processes implemented for using them must be compatible with FAA data exchange mechanisms and airspace design and procedures.Airspace Design and Management Initial AAM operations that are low density and low complexity will be conducted using existing airspace design and charting processes,and airspace constructs available today(e.g.,VFR corridors/flyways,T-routes).As the operations continue to increase in volume and complexity,novel airspace design may be needed to accommodate operations.The concept of designating cooperative areas for AAM operations envisions safe and efficient operations that may not require traditional ATC services in certain situations.They will be available to any aircraft appropriately equipped to meet the performance requirements and are created and implemented when operationally advantageous.Moving Forward The FAA will continue to work with AAM stakeholders to refine and further mature this framework and move towards an AAM ecosystem that supports innovation and scalability.The FAA is committed to ensuring the appropriate resources are allocated,workgroups are established to address areas that require research and development,and policy and regulatory decisions keep AAM moving forward into the future.36 ADVANCED AIR MOBILITY(AAM)IMPLEMENTATION PLAN,VERSION 1.0 Acronyms Acronym Definition Acronym Definition AAM Advanced Air Mobility IMC Instrument Meteorological Conditions AC Advisory Circular IMS Integrated Master Schedule ADS-B Automatic Dependent Surveillance Broadcast I28 Innovate28 AGC Office of the Chief Counsel LOA Letter of Agreement AEE Office of Environment and Energy LOB Line of Business AFX Flight Standards Service MOC Means of Compliance AIM Aeronautical Information Manual MOU Memorandum of Understanding AIP Aeronautical Information Publication NAS National Airspace System AIR Aircraft Certification Service NASA National Aeronautics and Space Administration ANG Office of NextGen NEPA National Environmental Policy Act ARC Aviation Rulemaking Committee NOTAM Notice to Air Mission ARP Office of Airports NREL National Renewable Energy Lab ASOS Automated Surface Observing System NTSB National Transportation Safety Board ATC Air Traffic Control OEM Original Equipment Manufacturer ATM Air Traffic Management NPRM Notice of Proposed Rulemaking ATO Air Traffic Organization PHMSA Pipeline and Hazardous Materials Safety Administration ATR Airport Technology Research and Development Branch PIC Pilot in Command AWOS Automated Weather Observing System PSU Provider of Services for Urban Air Mobility CFR Code of Federal Regulations SDSP Supplementary Data Service Provider CNS Communications Navigation Surveillance SFAR Special Federal Aviation Regulation DOT Department of Transportation SFRA Special Flight Rules Area EB Engineering Brief SMS Safety Management System EIS Entry into Service STOL Short Takeoff and Landing EMS Emergency Management Services TFR Temporary Flight Restriction eVTOL Electric Vertical Takeoff and Landing TLOF Touchdown and Liftoff Area FAA Federal Aviation Administration UAM Urban Air Mobility GA General Aviation U.S.C.United States Code HMR Hazardous Materials Regulation VMC Visual Meteorological Conditions ICAO International Civil Aviation Organization VFR Visual Flight Rules
2023-12-22
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