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Jimmy's Jobs of the Future
How Heathrow Runs Britain's Biggest Workplace | CEO Thomas Woldbye
00:55:28
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- [00:01]
Thomas
This episode is brought to you by Google Chrome.
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Jimmy
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Thomas
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Jimmy
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Jimmy
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Thomas
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Jimmy
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Thomas
ready to make anything online make sense. There's no place like Chrome. Check responses set up, required compatibility and availability. Various 18/ this episode is brought to you by Accenture. When your advertising operations fall out of sync, everything else follows. Spotify and Accenture are working together to reinvent the rhythm of ad sales, using automation, analytics and smarter workflows to simplify campaign delivery and access better data across the business. The result? Less time spent on operations, more time connecting brands with the moments and fandoms that matter most. Learn more@accenture.com Spotify welcome to Jimmy's Jobs of the Future.
- [00:58]
Jimmy
In 1930, the land for Heathrow Airport was acquired for £15,000 from a local vicar. 96 years later, it's the world's busiest airport. It is a remarkable story. It now is the biggest single site employer in, in the United Kingdom, employing 76,500 direct jobs and around 114,000 indirect jobs. It is amazing. It's like a small town with people going off on holiday. Over the next few weeks, we take you behind the scenes with Heathrow's CEO to talk about all the things that happen, how it's like a small town, how it has its own fire brigade and so on. It was a fascinating insight into Heathrow, the world's busiest airport. Thanks very much for listening. I hope you have a great summer holidays wherever you're going. On to today's episode. Thomas, welcome to Jimmy's Jobs of the Future.
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Thomas
Thank you very much.
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Jimmy
So tell us, what's the biggest difference between running Heathrow Airport than Copenhagen?
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Thomas
I used to say that apart from the fact that we get aircraft in and out or up or down if you like, nothing else is the same. And the reason for that is that Heathrow is a very different place. It's also quite a unique place as far as airports come. It's super densely utilized. It's. It has a unique mix of traffic, high transfer share, very high share of, of long haul. It's split into four different terminals, has three underground railway stations. So really putting all that together makes it quite a different state, quite a different place. Also from Copenhagen. Now, of course, there are similarities. Lots of stuff like radar systems, you know, international rules on how to Manage aircraft and so on, they are all the same. But also, for example, the stakeholder landscape is quite different and also the regulation, which is an important part of how we are managed, is somewhat different. So there are many differences now. There are also learnings, also things you can. You can. You can draw learnings from either way, by the way, but there are many, many differences.
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Jimmy
And just give us a sense of the size and scale of Heathrow when it comes to jobs, because it's pretty extraordinary.
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Thomas
It is the biggest single site of employment in the UK, potentially, actually in Europe, I'm not 100% sure, but we. We employ, whichever way you define it, between 80,000 and 100,000 people. Of those, Heathrow Airport has about 10,000, as the company Heathrow Airport Ltd. And then, of course, there's enormous amount of people in the area that has their outcome from Heathrow and work in, you know, in secondary industries and the supply chain and so forth.
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Jimmy
And with the addition of a third Runway, there could potentially be another hundred thousand. That's according to the government's own figures.
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Thomas
Yes, I think if you take the full effect, that would be right. That would not be on site only. That would then be, as I said, in the next tier of employment. But yes, absolutely. I think potentially, if you really take the nationwide impact and take supply chain and what it means for exports and imports and so on, it might be even bigger than that.
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Jimmy
And just give us an idea of some of those jobs that we might not be aware of, because I'm sure we all know the people at security, we all know the pilots and the people that check you in, et cetera, but there's so much that goes on behind the scenes. Right.
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Thomas
And I think that's a really good question, because I love to talk about that, because there is so much going on and we employ people, from architects to marketing people to engineers to doctors to nurses on site that have various jobs. We have almost doctors and nurses on site, then. Yes, absolutely. I mean, we have mobile nurses on mobile bikes roaming the area all the time. So that, don't forget, forget this is like a small city. People get heart attacks and all other injuries. I think we have about two heart attacks a month on site. So there's lots going on that you would compare to a small town or a village or even a big one. It's 200,000 people a day going through and of course, things are happening. So we have. We have a fire brigade on site, we have lots of IT people. So I think people tend to forget that airports are in high tech industry. We have a lot of relatively low tech jobs. Yes, but, but all the machinery, the tech that we have on site, you know, baggage systems, radar systems, warning systems of all sorts, security systems of all sorts, all need to be maintained and installed and renewed. And all of this is happening, most of it with our own people or our close supply chain. And of course all of that is then overseen by monitoring systems. Lots of it. And more and more obviously I.A.
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Jimmy
right. Yeah. And so it's so interesting thinking as a small. Well, as I suppose. Yeah. Small city, large town at a hundred thousand people working there and 200,000 going through. What's what happens with people like the fire brigade and so on because you don't have fires often. I mean obviously the incident earlier this year, etc, which I'm sure lives in the memory, but what, what else? So how does, how does that work?
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Thomas
That's a good point. And, and what we normally say is that this is the best trained fire brigade in the world. Hopefully never to be employed in real life on real life situations because they train a lot. We have just installed a brand new fire rig which is the size of an A380 because we need to be able to train on, on a fire rig that looks like the biggest aircraft we'll be. Will be required to handle. And that is an Air Force A380. We are just commissioning it. So we have just invested in that brand new rig. It can do all sorts of things. You can put fires all different places. You can put different fires. There are, there are seats inside. It's all made of metal of course because you have to be able to lit it like it light it up. But it, it has seats inside. It can simulate all sorts of various accidents or fires that can happen. And our fire brigade train on that all the time.
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Jimmy
Wow. So how many people in the fire brigade he throw.
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Thomas
You can't hold me to a number but it's about 100 something. 110, 20 people.
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Jimmy
Wow. Okay. Gosh.
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Thomas
Because don't forget they are on a 24 hour shift. So they're always on. So it'll be about a fourth of those people are on all the time. The remaining people are circulating and the
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Jimmy
whole place must be 24 hours pretty much. Right. Because what time does the first flight go?
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Thomas
Around five o'. Clock.
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Jimmy
Okay. And what time does it last?
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Thomas
One eleven o'.
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Jimmy
Clock. Eleven o'. Clock.
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Thomas
Right.
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Jimmy
So it's actually not that long between
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Thomas
them and there's lots to do in the, in the, in the, in the hours in between, lots of maintenance, lots of other, other challenges needs to be dealt with. We try to do our, at least the, the, the passenger, uh, near maintenance. We try to do at night so we don't disturb passengers on their journey. It's not always possible, but we do what we can to make the noisy stuff during night. There's also aeronautical maintenance, so stuff we can only do when there are no aircraft landing or taking off. I mean, good example is last year we resurfaced the northern Runway and this year we're going to resurface the southern Runway. That happens every 10, 12 years and that is an enormous operation. You won't imagine if you see it. I've been out there a few times. Literally at 11 o' clock, everything is lined. You have 120 vehicles lined up in a long row waiting for the responsible airport manager to say, okay, the Runway is closed. Then you'll see all these vehicles go out and this is trucks and specialty vehicles and they will scrape off 10cm of tarmac. You'll then have a cleaners coming in, you will have machinery to lay down new tarmac and they will manage to do about 100, 110 meters at best during one night.
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Jimmy
Yeah.
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Thomas
And then they'll all vacate, you know, half an hour before or in good time before the first aircraft is landing. And of course we have to make sure the tarmac is actually operational so that it's, it's hard enough. And imagine scraping off 10 centimeters. 10 centimeters, quite a lot.
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Jimmy
Yeah, yeah.
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Thomas
That you need to do and then relay that and in a very, very accurate way.
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Jimmy
Right.
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Thomas
And then vacate and then you do this next thing. So this goes on from May, no, from June to September, every single night. Because there's 3,500 meters of Runway.
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Jimmy
Yeah.
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Thomas
And if you only do 100 meters a night, you can imagine, you know, it's going to take a long time before you're done. So stuff like that, people don't see that. But, but I can show you some amazing video from, from what happens and how everybody's just ready like a military operation on where it goes.
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Jimmy
Like one team type thing, isn't it? How interesting. And those must be probably quite specialized people as well. I mean, talk to us about the tarmac generally, I think is quite interesting because, you know, people will know that the third Runway is, you know, been a long process going back to the 1980s and you know, the talks are about 50 billion for it to kind of come in and obviously that's some Extras around the hangars, etc. And so on, that have to be completed as well. But it seems a lot of money for a Runway. So just talk us.
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Thomas
Well, I think the important thing to understand and remember it's not all about tarmac at all. I mean the laying the Runway itself we say is about 21 billion. Now a third of that is pretty much purchasing the land. Another third of that is preparing the land. So if you take 2/3 out of that, you're left with about 7 billion for actually putting the Runway in. So I think people forget that when you compare with other countries. Many other countries have the land reserved or it actually already belongs to the airport. We have to pay for it. We then need to get people to vacate it. That takes an enormous amount of money off this project. And then we have to put in a Runway in tarmac. And that is maybe, that is maybe a third of that of the 21 million. Then we have another about 12 billion put in for building new terminals and so on. Don't forget, London will not just get a new Runway, it'll get a totally renewed airport. And that's the 33 billion we talk about. I know they're talking about 49 billion, but that is work inside the current two runways that fundamentally is governed by a different process. Now it's been mentioned that number because every year we invest about a billion pounds in the existing infrastructure and that will continue and that is on the 20 year horizon. So those numbers are not really comparable and they will be governed by the regulation I spoke about earlier. So they are not super relevant in this, in this context.
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Jimmy
But the 33 is okay and give us a sense of where everything is at because it's gone backwards and forwards so many times now. Where are we to this sort of average business listener who is probably uses Heathrow semi regularly, where are we with the third Runway?
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Thomas
We are at a point where discussion be going back and forth to government. Obviously the airport commission did a big piece of work to determine which option was the best one. And there are many considerations there. There's climate, there's community, there is of course operability, buildability and so on, and ended up concluding that a Runway to the immediate south, sorry northwest, northwest of, of the current two runways is the most efficient locations with all these factors taken in also. And when it comes to, you know, how much noise will people in London be exposed to and so on. So all these factors have gone in. So it's not just one factor, it's, it's, it's a multitude of factors and government then last year asked for submissions of proposals to how to do that best. And that's what we did in September last year. And government is now considering our proposal and how that plays into the airport National Policy Statement which is being reviewed. That was put in place about six years ago that needs review in order to say does it take in all the latest knowledge on the Runway that contains lots of conditions that we will have to live up to when we build it. Community, noise, climate, but also capacity. Airspace modernization. This is a project goes far wider than building just building a Runway and that is due to come out in the middle of July and hopefully can bring a lot of clarity on. Okay, so what is now the process going forward? That's as far as we are ahead of us is still for example airspace modernization. There's a big difference between operating a two Runway and a three Runway airport. Now we have quite some years before the operational so we have time to put that in place. But that is a project in itself that will make flying in the UK much more efficient. Lots of the rule book for the current airspace is from the 60s. It's not up to date. So it's long overdue to get the airspace modernized. Then it itself could take out between 5 and 10% of fuel burned in there. And that's from the stacking. That's from stacking is for more efficient flight path particularly we don't do much stacking anymore, but more efficient flight path. Today you will see aircraft almost six sagging because they are following paths that were defined by radio stations back in the 60s. That doesn't have to be done anymore. But this is a really, really complicated technical piece of work that government has now started that is relevant whether we build a third Runway or not. The challenge is that it's different whether you operate two or three runways. You can't use the same airspace modernization for two runways as you can for three runways. So you have to sort of decide what you want to do. And this is something that has impact on all of the uk. Yeah, so. So where we are on the third one is all of this work is ahead of us. Also the longer term regulation. How is Heathrow going to be regulated in the future? Because a Runway is not like a 5 or 10 year build. It's for the next 50 years. How do we make sure that we get the best and most efficient financing for our customers, for our airlines? So they don't pay more than they can afford but also make it a business case for our shareholders, of course. And there we talk about, you know, do we look at a 30 year, 20 year horizon? So there are many, many technical things that are still ahead of us. But hopefully with the ANPS review coming out in middle of July, we will get clarity on these issues so we can really start doing the more fundamental
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Jimmy
stuff and talk to us about the shareholders as well as. Then let's go into the business model of how an airport actually operates and so on because again, I think it's one of those businesses that is perhaps not as well understood despite the fact everyone pretty much uses them. But talk to us about the shareholders, who owns it, etc.
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Thomas
Heathrow is primarily owned by a number of sovereign wealth funds from, from France, from Asia, from Middle east, who have been most of them long term investors and are long term investors and who supported billions of pounds of investment into Heathrow over many years. And I think if you look at it quite successfully, I mean in the last 10 years alone the passenger numbers have gone up by 10 million without us actually having space for another aircraft. We have been full when it comes to aircraft movements for many, many years. But despite that we managed to put another 10 million passengers in cooperation with our airlines, which is primarily putting in bigger aircraft and putting more people on those aircraft.
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Jimmy
Is that. Yes, I was going to say how have you done that? Because you haven't had an extra Runway.
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Thomas
No, but, but we are coming to the end of that and that's why we need third Runway. And, and we, we are, if you ask me, too late in realizing that, you know, we should, we should have built it 20 years ago so we would have a more, a more sort of flattened out utilization curve. Now we, we'll basically run till we're full, which will be about 10 years from now. If you look at our growth rate in the next 10 years, it'll probably be around a percentage a year, 1% a year, which means that we will lose market share when you compare to the average growth of maybe 3, 3.5% in the global aviation industry. So we already now know that we are going to be behind, which I personally find frustrating, but there is no more space. And if you look at the utilization of Heathrow, which is quite interesting, I think people don't realize that we operate 6.5 passengers per square meter of airport per year. Sounds a bit random, but just to compare, the busiest airport in Europe apart from us is Frankfurt and they operate 2.75. So we are three times more densely utilized than any other airport in Europe. And if you ask me, it's not my doing it, it was there before I came. That is a huge success. And I personally think people should be more proud of what's actually happening at Heathrow every day, because it is magic. And I talked about the three underground railway stations, you know, by far the best utilized two runways in the world. On top of that, three terminals, which also are run hugely efficiently. And that is of course why Heathrow is busy. And this is why we have less resilience than most other airports. You know, when something goes wrong, we're more compressed, so we have less time to catch up. Right. Is because we are so densely utilized. So Heathrow is, in that sense, by far the most efficient airport in Europe. And I think people should be quite proud of how far Heathrow has gone in that sense. But we are just getting to the end of the possibility of that, of putting in more. And that's why a third Runway is direly needed.
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Jimmy
And so what do the shareholders measure your job on, then?
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Thomas
They measure that on a number of things, but a lot of it is customer focus. So the satisfaction of passengers. We measure that every single month in quite a scientific manner with lots of responses. So we know where we are. And luckily that has been improved quite notably in the last couple of years. They measure me on operational efficiency, they measure me on climate impact, for which we have commitments that we need to live up to. They measure me on cost, of course, as well, and financial results. No surprise. So those are the main factors, including, for example, security, waiting times. You're still measured on that? Yeah, that's part of our passenger satisfaction. And, you know, that's one of the areas where you've seen the investment in new technology and we talked about skills and so on, and I might want to come back to that. But that has required a substantial skills upgrade to operate that new machinery, which is much more based on AI, but has also reduced flow times. I don't know where latest at Heathrow, but, you know, the waiting time, 98% of passengers wait less than five minutes to go through security. That's absolutely world class. I mean, compared to anyone. You're also seeing that our passenger satisfaction in that area has, has increased dramatically for that reason. But that's what new technology can do for you, amongst others. So. So yeah, those are the main issues I'm mentioning.
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Jimmy
And so how does the, the business model break down then? Obviously, airlines pay for slots and so on, but what are the other airlines
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Thomas
actually don't pay for slots? I think people. People think that if you want a slot of Hiso, you can purchase one from another airline. But Heathrow doesn't make money on that. Which is an interesting observation or interesting model in that we have actually built the infrastructure and owned the land, but we don't actually have the, the ownership of the slots. They are owned by the airlines. That's sort of a legacy thing that goes back many, many years. But it also means that slots are traded at Heathrow between 20 and 50 million pounds. But we don't make any money on that. That is entirely done between the airlines. And some different airlines have different parts of the slots. They own a number of slots and they are time bound on the day and so on. So we don't make any money on that and never did. And that's also why I'm saying that when people compare us to a monopoly, I would say yes, in terms of our location, you know, there's no other airport right here, but there are definitely other airports in London. But the scarce resource that Heathrow is in fact the slots and not the airport itself. The way we have remunerated is that the airlines pay a fee per aircraft coming in and a fee per passenger going through. And that's the main source of our revenues. Then we make income by.
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Jimmy
Explain that bit again to me. Sorry. Yeah, they're like per, per wall.
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Thomas
The airlines pay a fee per aircraft, a fixed fee by the size of aircraft.
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Jimmy
Okay.
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Thomas
And then they pay a fee per passenger, okay.
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Jimmy
Whether that passenger slot is filled or
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Thomas
no, they simply pay per passenger. We count the amount of passengers that go through the airport and they pay for that. So that has nothing to do with the aircraft or how much, what the load factor of the aircraft is. They simply pay for the passenger. It's like you go to the cinema and you pay to go through. It's pretty similar to that. So that's how we are remunerated. And that's, you know, 50 plus percent of our income is from what we call airline charges. Then we make money by offering parking. All the shops we have, Tennessee, we have, we have quite a big, you know, real estate owner and we let out real estate. So those are the main sources of our income. What complicates it all in a bit is that all of that money, even if we make it on parking or on shops, that's all put into one big pool that is then divided out to determine the price to the airlines. So we don't get to keep anything separate. If we make more money on parking, it goes into the big Pot and actually helps reduce the overall price for the airlines.
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Jimmy
Right.
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Thomas
Okay, that is, and that's the simple version. It is, it is hugely complicated because there are many other issues that are going into that calculation. But the simple version is that definitely.
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Jimmy
Okay. And I know a very popular question when I said that you were coming on was to ask how, what shops decided that go in at airports? Why are there always, you know, sort of two WH Smiths, including WHSmith books and a luggage shop?
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Thomas
Well, two things really. We look at three things maybe, but one, first of all, what do we think our passengers would like?
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Jimmy
Yeah.
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Thomas
Because fundamentally that makes them buy things, which is the, the aim of this. So it's all sort of carefully curated based on what passengers are asking for. And that's why you have what we call travel essentials, because people do want to buy another charger or they do want to buy suntan cream and so on. Right. And of course our obligation to what we call the overall till is actually that we get the best out of that. That also benefits airlines.
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Jimmy
Yeah.
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Thomas
So that's sort of our obligation. So the other, the other consideration is fundamentally how can we generate the highest turnover per square meter? We don't have enough square meters. If you like, we would like to have more square meters to broaden out the offering that we have, if you like, to the benefit of passengers. You will have seen in most airports in Europe, for example, over the past 10 years, a shift from shops to food and beverage. More people spend more time and more money on eating and drinking than they did 10 years ago, just to give an example. So you've seen a clear shift from shops and same at Heathrow from shops to food and beverage restaurants.
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Jimmy
Why, why is that?
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Thomas
Well, I think that is a, a, a, a, a trend that goes throughout society. I mean, if, If I go 20 years back and somebody proposed that I would be paying five pounds for, for a cafe latte, I would have probably told them they were crazy.
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Jimmy
Yeah.
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Thomas
And now I happily pay £5 for a cafe latte.
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Jimmy
Right.
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Thomas
So I think the world has definitely moved from a more, you know, Asset based, if you like, people don't buy so many televisions and fridges and so anymore.
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Jimmy
Yeah.
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Thomas
They buy much more experience. So we, we are moving to more, to a much more experience based sort of economy or at least a leisure economy. Right. People are spending more on travel, they're spending more on experiences than they spend on, on things and stuff. Right. And I think you probably recognize that in your own economy and that is definitely A global trend. And that's also why you see people travel. And that's also why you see, I think, the travel market, so to speak, ever increasing, because everybody wants those experiences. And there are. And that's why when people ask me about the future demand, I'm less concerned. There are about 3 billion people in the world and you can about easily 2 billion people in Africa, a billion people in India and about a billion people in China who have either never traveled or only traveled very, very rarely. We travel about three, four times a year. If you take all those people and say they also want to travel three or four times a year, the demand is enormous. And that is not just business, that's definitely also leisure. And that means that the demand for airports, if we just extrapolate that, is actually quite high. And also why I think that we really need a third Runway at Heathrow. The consequences of not taking that decision are much bigger than the consequences of taking the decision, because the economic growth, the skills, the innovation that we forego by doing that are enormous.
- [27:49]
Jimmy
I agree. It's really good point around the traveling and the increase in it. And London is always going to be one of the world's top 10 visited cities.
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Thomas
Exactly.
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Jimmy
So, yeah. Why do you think politicians have struggled with it for so long of all different stripes as well? Like, it's, it's.
- [28:08]
Thomas
Of course, I've not been here during all that. Yeah, during that period. But I have, of course looked at it. I think it is because it is complicated, you know, it is difficult. It's not easy. And I can appreciate why it's not easy, because most places like Amsterdam, you know, when they built the last Runway, which is not that long ago, they had the land reserved. You know, everybody knew that sooner or later there was going to be a Runway. Now, that didn't mean that people didn't complain, but at least they didn't have the challenges that we have here, where we have to purchase the land, which is not a particularly sort of pleasant aspect of what we're doing. I think what maybe have not been explained well enough are the consequences of doing all positive, mostly. And the consequences of not doing, because the consequences of doing it is an enormous injection. I mean, 33 billion pounds over 10 years, in addition to the 1 billion pound we already invest, we're looking at 4 billion pounds a year of investment into a 90%, 95% UK supply chain. So this goes all over the country. This is not about London, because most of our supply chain supplying all sorts of fences and concrete and Steel and whatever, that's all outside of London. So the consequences of building is an enormous injection. On top of that, you of course get the economic benefit of then having it in 10 years time, having the Runway, meaning a percent maybe could be 17 billion, I think a year value increase for the, for the UK economy, which affects exporters, leisure, tourism, business, UK plc. I mean, the financial services are critically dependent on connectivity and if you don't do it, you get, you lose out on all of that, plus you get a level of stagnation. Right. So I think that maybe we have not been able to explain well enough to say this is, this is a huge opportunity for the entirety of this country. And if you then look at skills and jobs, one is the amount of jobs that obviously goes into this, this has thousands of jobs every year, 10,000 jobs every year. That, that is paid for by this, because much of the supply chain is manual, if you like. On top of that, if you look at Heathrow as a company, and I say we are quite a high tech company, I mean, some of the stuff we built today, we're building a new baggage system in T2, super high tech, the safest, most technically advanced, at least one of those technically advanced package systems in the world. That takes innovation, that takes research, that takes, you know, engineers, IT people. So the injection not only of money, but of skills development, of innovation, that these investments give an opportunity to sort of be paid for. Now, of course, we don't just do it out of, out of goodwill, we do it because it makes sense for the airport, but that money will not be there. You know, the alternative is for Heathrow to stagnate about 90 million passengers a year or plus, minus a bit. We are right now at 85, so it's not that many years out. And the focus then will become both from the airlines and from ourselves to cut costs because you won't get any more passengers to pay. So what will you do to keep charges the same with inflation and so on coming is to cut cost and reduce activity. So I think we need to look at both sides of the coin and say, what if we don't do this? And then look at the enormous price there is if we do this. And this is, I said thousands of jobs. It's skills development, it's innovation, it's research. You know, 33 billion pounds can pay for a lot, not just tarmac. And don't forget at the end of that, you will not just have, you will not just have a new Runway. Right? I think that's what people get. You will have new terminals, you will have other terminals renovated, you will have terminal one torn down.
- [32:03]
Jimmy
Yeah.
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Thomas
So you'll have, I mean what will in many ways looks like a whole new. Look like a whole new airport, not just a piece of tarmac at 33 billion. Right. That, that is really, as I said, a smaller part of it.
- [32:14]
Jimmy
And did I also read a stat about 90% of the supply chain will come from the UK as well to build this. Yes, that's quite extraordinary as well. And that's, that is things like the sort of security fences and so on, which have to be a pretty serious.
- [32:29]
Thomas
It's everything. I think it's quite normal for airports to be very locally sourced because. Why, why would you import heavy stuff if you can supply it locally, whether it's 90% or 85%, but it's in that range. Don't hold me to it. And actually I think 73%, if you look at the number of our suppliers, about 73% are small and medium sized enterprises. So. And we do quite a, quite a, a focused development of that, that we don't just go to the normal big suppliers, that we actually try to develop a supply chain that consists of smaller and innovative companies, not just in our own vicinity but all over the uk and that's quite successful. And if you look at it, I said 70% of our suppliers are small, immediate sized enterprises. In that way we help develop that undergrowth of new startups and companies. And, and if we don't do this, if we don't build a third one, there is not 30 billion pounds flowing into that supply chain. So if I look at it now, I'm a bit astonished that we haven't done it before because the upside is huge. And of course we have to manage the downside, we have to manage climate, we have to manage our community, which we are very well aware of. I actually think that the most harm we've done to our community is to keep them in doubt. If you're just kept in the dark constant for years and years and years, I think is a lot. Personally, I think that's a lot worse. I'm, I'm not, you know, I speak to a lot of these people and they're not happy and I can understand why, but I think the worst you can do is to keep them in the dark. Let's take a decision and either get it done or not get it done. But, but I don't think if we don't do it this time, I doubt that it'll ever be done.
- [34:05]
Jimmy
I suppose one of the challenges that people might for been in the last five years is, is of course, the pandemic. Right. And whether that was going to change the way that we work and business travel etc, and we were all going to zoom, I would just now that we've kind of like got well through that, I think sometimes we sort of box it all off because it was such a kind of like traumatic experience for us. We. We sort of don't think about it more as much. Where is business travel now post pandemic? Is it?
- [34:37]
Thomas
Business travel is largely back on the same level. It took a hit that was harder than leisure travel and leisure travel took a sort of a stronger growth afterwards. Business travel is coming back to about the same level, which means of course it has a break in the curve. But I think overall travel, and you know, I've been in business for 40 years now, believe it or not, and somehow the world comes back. Now that's not necessarily an everlasting truth and I'm aware the world might change, but if you look at the resilience of travel in general, and that's after sars, it's after the financial crisis, after the IT bottle, and now also after Covid, not only does the growth curve come back to the same growth level, it actually comes back to the same curve. So you see extraordinary growth for a period and then you come back to the same curve. Right. And that's also what happened after Covid. So as I said, people want to travel and there's a lot of people out there who haven't traveled yet who, who gets more and more wealth and wants to travel. So. So, you know, I'm less concerned about that, to be honest. There are other things I'm much more concerned about than, than that part. And the travel industry has proven over 50, 60 years now to be incredibly resilient. And on that part, I don't see necessarily a break in that. You will see we will have breaks as we've had in the curve. You saw a break during the financial crisis, which was notable during sars, particularly in Asia. It was less affected in Europe during the IT bubble and other places, you know, you see breaks in the curve. But I think we need to prepare ourselves for the fact that the curve will continue.
- [36:15]
Jimmy
What assumptions do people have about airports that are wrong, do you think?
- [36:23]
Thomas
Oh, I think people underestimate a little bit the complexity of what goes on behind the scenes, you know, the enormously high calibration that we live with. I mean, we deliver bags with 99% accuracy. You know, 1% of bags are. We don't lose bags anymore, but 1% of bags are not loaded on the right plane or not loaded in time. But, you know, we load 40 million bags a year. And actually last year, as one of our. We focused a lot on operational efficiency. Over the past 18 months, we have reduced the amount of bags not being loaded by 200,000. Right. We have increased the amount of aircraft on time so that 4 million people more leave on time. And Heathrow is today the most punctual big airport in Europe, which is a huge achievement. And that's happened over the past two years. We were starting from behind and we're now ahead of any of the big airports in Europe. And that's happening by. How do we do that? That's by working with airlines, working with handlers, working with nats that controls airspace. Of saying, how do we now sit together around the table and make this better? Because it's good value for airlines. They save millions when everything is on time. It's good value for passengers, it's good value for the capacity of the airport. But we need that cooperation. And I think people sometimes underestimate the complexity of what actually happens. And if you look at it, how well it actually runs, we take that for granted. But, but it is the, the margins that we work with are, are very, very small and we deliver to those. And if we then look at what's behind it, I mean, just the baggage system, it has hundreds of individual small, little electric engines that are all controlled by computers. And, you know, every one of them can go down. Right? And, and just having that to run 99% of the time is, is really quite, quite amazing. Right, I think that's one. Then, then I think that. I don't think people understand how much time and energy we spend on our community, on, on noise, on how to alleviate noise, how to give respite to people around the airport, how we run aircraft in different directions and different, on different runways at different time of day to make sure that we, that we give noise respite to all the people that live around us. How we focus on that local supply chain. We facilitate apprenticeships and jobs for everybody in the airport, not just for our own company, but for all opportunities in the airport for the local community to make sure that they get the benefit of actually being close to an airport, which of course have disbenefits as well, but has benefits. And the economic engine that an airport is and how much time we actually have People who do nothing else but make sure that our community gets a benefit out of that.
- [39:23]
Jimmy
Even talking to you, I realized that the amount of things you must be keeping in your head about how they all interlock and so on, and when one goes wrong, there'll be a series. What does keep you up, what does really worry?
- [39:38]
Thomas
Without joking too much. I think people know that I sleep fairly well, but. But not much, actually. And why is that not? Because I think if you're kept up by all these concerns, you probably have the wrong job. Everybody needs their proper rest to do the best job they can when they're working. The reason I'm not is because I have a fantastic team of people, not just in my own company, but in all the companies in the airport that all work with, first of all, one overarching priority that we can all agree on, which is safety and security, and we take that really, really seriously. And Heathrow definitely stands out when it comes to safety, and everybody's focused on that. There are some very, very strict rules and systems that make sure that the whole supply chain, if you like, of getting an aircraft off the ground or on the ground is followed by everybody, and everybody understands that and knows that. And we have lots of monitoring systems that all the time will, Will. Will pop an alarm if, if something goes wrong. So. So you can say there's a lot of assurance going on and that that is sort of what makes me rest, that. That as long as I can assure that we have done everything that is humanly possible to make sure that our systems are running the way it should, 24 hours a day. But also, and that's what you saw during the fire that you mentioned, that if they're not, we have to put safety first and say we cannot operate if there's a risk to human lives, whether they are in the aircraft or whether they're on the ground.
- [41:12]
Jimmy
How have you changed your systems since the fire, etc.
- [41:19]
Thomas
We have been through everything we do, we've been through our procedures, and how can we have more resilience in terms of bringing the airport back faster? Are there areas where we could segregate the airport differently in terms of how the electrical system is divided, so that we could isolate things more easily and that way operate, come back to operation faster? We put in a number of areas. It didn't affect it on the day, but we found areas where we could have better backup systems in terms of backup power that not in that situation but in other situations would help us to keep part of the airport operating. For example. So we have had a huge year long investigation on everything that we learned from that day. It's not often you get the so to speak opportunity to have a scenario like that run out. Now don't forget it was unexpected. I mean, it was not our transformer station that went down. It was part of a supply chain of utilities. But nonetheless, of course, we need to be prepared for every eventual idea.
- [42:19]
Jimmy
Speaking of the impact on local community, I remember actually we were filming at McDonald's, we were doing an episode out with a lady called Shefali near their Heathrow ones. And actually they reported being a lot busier because of it, because the amount of people sort of going through, which is just quite interesting, sort of link that together. How do you, what airports do you admire? Right, like what? And is there a sort of, you know, is there like a G7 of airports type meetings?
- [42:48]
Thomas
You could say that there are various airport type meetings. We have a global organization which is called aci, which is the international sort of interest organization for airports. There are of course various types of airports and they have various types of challenges. As also said, when I compare to for example Copenhagen. And there are of course the very big airports like Heathrow, like Frankfurt, Paris, Hong Kong, jfk, Istanbul, Singapore and so on. And we talk about the things that are relevant to us, if you like. And also we look at how can we learn from each other, particularly on things like safety and other things that are not competitive. So there is that definitely. And we do learn from each other to the benefit, I hope, of passengers and airlines.
- [43:42]
Jimmy
Yeah. So which ones do you particularly admire? Singapore.
- [43:49]
Thomas
Singapore is a well run airport. I think Hong Kong has done an amazing job in the last few years particularly they built the third Runway, they have built a lot of new stuff there. You can see the benefit of innovation. They're working on driverless vehicles, they're working on a lot of innovation. Facial recognition in their checking and so on. We are not even there yet. We should be there. But there are legislation, other things holding us back. Whereas for example, Hong Kong has done a lot of that. And there you see the benefit for the society of, of, of having those airport investments not just in, in terms of additional capacity for, for the, for the country, but what that supply chain does for local suppliers and innovation and so on, because they need that. They want a more efficient airport, of course. So they have put in a lot more innovation in the past few years now. That's definitely what we would want to do as well.
- [44:39]
Jimmy
What do you think the next 10 years might look like for airports, how might the experience of a passenger change?
- [44:47]
Thomas
I think you'll see continued growth. What we want to do, and I think all airports want to do that, is to make the journey even more predictable and even more seamless. You've already seen it with our deployment of the new security scanners. We are by far the biggest airport who have completed that yet. The effect that has had, you don't have to take anything out of your bag, you just put your bag on the belt and it goes through. And the new scanners will also mean that you go through faster, but with higher security, because we can recognize more, not just metal, but other things. So you have had a better experience, but higher security. So higher security hasn't meant more compass process, it's actually meant a more smooth process. And you can say that is what we're trying to do in everything we do. I think you will find that scanners will come in where you just walk through, you don't have to stop, you just walk through and it'll put out an alarm if needed. You'll see facial recognition. So faster boarding, faster immigration, a faster journey through the airport in general. What we also do is that we are deploying digital cameras and AI to turn aircraft faster so that we can try to increase the reliability and the punctuality of what our airlines do. What that means is simply you put a camera in that monitors the stand where the aircraft is parked and that will then monitor the sequence of catering coming in, fueling coming in. And you won't have manual reporting. You will know when the aircraft has come in. That'll be absolutely accurate. Today, it's more manual. We have already put part of this in place, but that'll be in place all over. So you get in, it's. It's all about smoothing out the journey and making it more predictable for both the passengers and the airlines and everybody else involved, because that just means you get more capacity and you get higher quality.
- [46:37]
Jimmy
Yeah, that's really interesting. How it will change. Do you think it might change in terms of. I was just struck by what you said earlier, but in terms of the experience side of it, people eating more food and beverage, do you think there might be more things that come in, like sort of virtual reality stations or things like that? That could be a bit more.
- [46:57]
Thomas
It's interesting, it's something that. That I have been working with all the 15 years I've been in this industry, is how could we do more of that without getting too into the details? When you travel, you're in a different mode than when you are in the high street on a Saturday morning.
- [47:15]
Jimmy
Yeah.
- [47:15]
Thomas
When you're in the high street Saturday morning, you park to park because you want to stroll around. Whatever you want to do, you have time in the shop, whether it takes five minutes, more or less, typically not critical. When you are traveling, you are on your way somewhere. And many people today actually still most people sort of get a little bit concerned when they travel.
- [47:34]
Jimmy
Yeah.
- [47:35]
Thomas
So. So they don't feel they have a lot of time necessarily. And we have to convince them that they have time in the sense that we need them to know all the time, you know, where's your gate and how long time to get there. And if people are at ease around that, then they start thinking about other things. If they're not, they can't focus on anything. But really what is my journey about and when do I need to be there? So we need to get people at ease and airports are quite good at that. So there's quite a bit of psychology behind that this. But getting people to spend time on sort of time consuming activities is really difficult. Many airports have tried, you know, put in is a more experience based shopping. You will see that if you go to the high street, more and more shopping becomes experience based. You know, you participate, you cook something or you, whatever you paint, I don't know, something you want to buy or whatever you do, you get engraving, engravings and so on. It becomes more experience based. That has a challenge in the airport in this, in the sense that it's difficult to get people to really focus on that. But we are, we are doing that because really what we want is to give people the best possible journey and the journey that most lives up to their expectations.
- [48:43]
Jimmy
It's true though, right. Because someone like me, who knows being late like an airport is a bit of a. Where I'm like, I feel like I've got to be on time like four or five times within the space of a few hours. And I know there'll be some sort of like people out there. It's like, well, they want you to spend longer in the airport so you do more shopping and whatever. But actually you don't. Right. Because you end up rushing to the gate like going.
- [49:10]
Thomas
It depends a lot on. It depends a lot on who you are. I used to say that my biggest sort of success criteria was if I could get people to say I come early to the airport because I enjoy it so much. Yeah. And, and I know quite, I mean there's definitely Segments of, of. Of passengers who use the airport as their main shopping mall. I know lots of men who buy their shirts and ties and other things and because they know where to get them, they go through the same airport, they know where the shops, the shirt shop is and they know which shirts they want. Right. It's the most efficient way for them to get dressed. And other things. Same for women, particularly in a certain category. So, you know, I think it's all about how you use the airport. Our challenge, a little bit different from many companies, is that we can't position ourselves to a specific segment, right. Because we need to cater to the segments that come to the airport. You know, other brands can say, well, we are in this segment of the journey or we're in this segment of perfume or wherever you are. We don't have that, if you call it luxury. We actually have to have a customer strategy both for passengers and for airlines, because airlines are different as well and have different relationships requirements that caters for what we get. So we need to cater for the entire population when it comes to passengers. Whether it's yourself that comes half an hour before the aircraft leaves and wants to run through in the most efficient way, or whether it's the people who need assistance, which is more and more people. It's a lot of people needing assistance. You know, everything from wheelchairs to other forms of assistance to people who wants to spend two hours in the airport and wants proper shopping, proper food and so on. We need to actually have a strategy for all of them and we do that quite consciously. How do we make it a positive and seamless experience for all of these segments?
- [50:54]
Jimmy
I'll put you slightly on the spot here now, but out of those 200,000 people, how many do you reckon need assistance?
- [51:03]
Thomas
I should probably know that it's about 15% and it's increasing. It's gone up in the, in the past few years. So we're also looking at know how can we potentially differentiate that product if we call it a product? Because people don't pay for it. But yeah, but how can we make that? Because, you know, we have a tendency to have a sort of one size fit all and that's not ours. There's very strict regulation around this, but there is sort of a little bit of a tendency to have a one size fits all. But that's not the case. People need assistance for very different reasons. You know, some are physically disabled, but others, you know, have other concerns. Maybe afraid of airports, maybe other mental issues that we need to help with. And they don't need a wheelchair, they need other sorts of assistance. Right. So I think that is also an area where we really strive to be excellent. We've done a lot of work in that area together with the airlines in the past five years. And as I said, it's increasing and we're working hard on it and it's going very well, actually.
- [52:03]
Jimmy
Good. Okay. And what's, what's one travel hack for getting through Heathrow? What's something that people might not know or.
- [52:13]
Thomas
Yeah, I think, I think most of the terminals that Heathrow is fairly intuitive. I think in the old days I would have come up with something about how you find the shortest security queue.
- [52:24]
Jimmy
Yeah.
- [52:25]
Thomas
But today the, the security queues are actually really, really short across the board. So I can't even come up with that one. What would I do? What I always do in any airport now, in Heathrow, I know, of course, like the back of my hand, but any airport is really to orientate myself first. So where is I'm going? How long will that actually take? Are there any obstacles in the way? And then I relax and either whether I do work or whether I get something to eat or go to a lounge, if I can, you know, it's different. But it's about that orientation. Say okay, and then say, okay, bye. X time 10 to 3. I need to get up and go away because then you can relax. And I think that many people are actually a bit anxious still when they go through security when they travel. Right. And, and, and, and I think it's about getting that anxiety level down and relaxed because you're mostly there for good, fun reasons. Right. We want people to have fun. Right.
- [53:19]
Jimmy
Well, that's it. I always think. Right. Particularly once you've got through security. I've never missed a flight yet. I will always be worried about missing.
- [53:27]
Thomas
There you go.
- [53:29]
Jimmy
But it's mad.
- [53:29]
Thomas
I mean, no, and it's very human and it goes for most people. Right. And our job is to give you all the best possibilities and opportunities to get rid of that anxiety. And by the way, there's no hiding that people who are relaxed also spend more so, you know, it's a good business reason for us to serve people better on the fundamentals like security and orientation and so on, is that, yeah, people get a better journey and they're more likely to eat or shop.
- [53:57]
Jimmy
And finally, you've brought us this rather lovely little memento, which is. I'm going to hold it up to the camera as well. So you can see this is a piece of. Piece of the Runway.
- [54:06]
Thomas
This is a piece of the tarmac that we pulled off, as I just said last year when we resurfaced one of the runways and there were some pieces left and we took them off and. And said this. So this is a piece of tarmac that has seen thousands of flights landing and taking off.
- [54:22]
Jimmy
It is amazing. Well, thank you very much. That is certainly the best gift. I think we might use that now to store our water on going forward.
- [54:29]
Thomas
I can tell you it's solid.
- [54:31]
Jimmy
And, Thomas, thanks so much for coming on Jimmy's job as a feature. It's been really interesting.
- [54:36]
Thomas
You're welcome. Thank you.