Facilitating Aerotropolis Growth Through Enterprise and Free Trade Zones, International Alliances and Trade Agreements

Peter Budd

Director Aviation and Chairman UKTI Airports Advisory Council

9th July 2014

Free Trade Zone

• Special class of economic zone.

• An area without the intervention of

customs authorities.

• Conducive to international trade.

• Benefits:

Duty exemptions/ deferral.

Supply chain benefits.

Currency exchange benefits.

Liberal business structures.

Inventive tariff relief.

• Value of Global Air Freight –$3 trillion

Source: Arup Analysis

Financial/Economic Advantages of the Free Trade Zone and Geographic

Advantage of the Airport.

• 1959 – means of economic stimulation.

• Adjacent to Shannon International

Airport.

• Importance of the airport to the FTZ was

recognised

• Airport as a crucial connection -

Facilitating trade with the USA.

• Free Trade Zone Airport City.

• Currently:

€3 billion of sales within the

zone annually.

100 multi-nationals.

6,500 employees.

Source: Irish Dept. of Finance

First ever pairing of an airport and free trade zone.

Shannon Free Zone – World First

Abu Dhabi International Airport, Free Trade Zone

Mutually Beneficial Relationship

Source Arup Analysis

Source: PDMC.com

Mutually Beneficial Relationships

• Airports and FTZs – Symbiotic relationship

• FTZ: Dependency on international trade

networks.

• Coupling the benefits of the FTZ with an

international airport.

• FTZs – Attract enterprise and business,

especially internationally operating and

transport reliant commerce:

Development of the Aerotropolis.

Opportunity for cargo and passenger

services.

A direct non-aero revenue stream for the

airport.

The FTZ supports the aerotropolis and

the aerotropolis supports the FTZ.

This relationship supports continued

growth.

• FTZ supports the initial growth of the

aerotropolis.

• Risk of reliance on FTZ.

• Aerotropolis growth from new enterprise

and supporting commercial activities –

shift away from reliance on FTZ.

• Attracting added value for the

aerotropolis through industries such as:

High value manufacturing.

IT related industry.

Air cargo park.

Medical services.

Logistics and distribution centres.

• Complementary to air freight reliant

businesses.

Taoyuan Airport, Taiwan, Free Trade Zone

Source: cifatlanta.com

Aerotropolis Growth – Attracting Added Value

• Taoyuan Airport, Taiwan.

• Incheon Airport, Korea.

• Dubai International Airport, UAE.

• Dallas/Fort Worth, United States.

• Gauteng Province, South Africa.

• Willow Run, Detroit, United States.

Growth in China of the FTZ

• In China the FTZ at Shanghai Airport is

expected to serve as a laboratory for

testing out the free zone concept.

• Great opportunity for global trade

relations and international development –

alliance opportunities.

• Governance issues - 3 year roll-out

expected.

Dubai Airport Free Zone Source: dafz.ae

International examples of Aerotropolis Free Trade Zones

• Establishing formal agreements between

airports to support FTZ and aerotropolis

growth – Mutually beneficial.

• Maximising connectivity between

aerotropoli – establishing a network of

free trade zones.

• International development opportunities.

• Maximising trade opportunities and

connectivity.

• Collaborative and skills sharing

opportunities in the manufacturing sector.

• Potential wider economic trade benefits

to the participating countries in the

alliance.

• Mechanisms for alliance– formal

agreements including, Economic co-

operation framework. Incheon Aerotropolis, free zone.

Source: businessfacilities.org

Source: airport.kr

International Alliances – Co-operative Business Channels

Source: Arup Analysis

Dallas/Fort Worth – Building Global Alliances with Aerotropolis Free Trade Zones.

The Future of the FTZ/Aerotropolis Alliance

A potential network of aerotropolis/FTZ alliances

Source: Arup analysis

• Aerotropolis – FTZ relationship:

Recognition of the enormous benefits.

• Expected global growth of the FTZ and

aerotropolis pairing.

• Development of FTZ’s in Latin America,

Russia, Asia and Africa will strengthen

global air trade in developing markets.

• International trade agreements will

support links between continents and

regions.

• Further alliances will establish a global

network of FTZs, maximising upon the

increasing value of air freight.

• Supporting the global economy and

growth in trade.