ACI World report underlines pressure on airports to defend and grow revenues

INTERNATIONAL. Growth in airport revenues was stalling even before the COVID-19 pandemic and so calls for tighter regulation of airport charges are unfounded, according to a new report by Airports International Council (ACI) World.

The report revealed that in 2019, total airport revenue worldwide was US$180.9 billion, up from US$178.4 billion in 2018, an increase of just +1.4% compared to the +3.5% increase in air traffic over the same period. This testifies to a real decrease in airport revenues on a per-traffic unit basis before the severe loss in revenues brought on by the pandemic.

ACI World’s report has found that the economic fundamentals of the airport industry serve as a benchmark to assess the recovery (Pictured: Frankfurt Airport, courtesy of Fraport AG)

ACI World has published its 2021 Economics Report and Industry Key Performance Indicators, which includes analysis for 2019 – the full year before the advent of the pandemic in 2020 – and includes data from more than 950 airports of all sizes and business models in all regions, representing 81% of worldwide air traffic.

ACI World Director General Luis Felipe de Oliveira said: “As the aviation industry plots a recovery from the catastrophic impacts of the COVID-19 pandemic, the economic fundamentals of our industry serve as a benchmark to assess the recovery – and transformation – of the airport business, paving the way to return to the pathway of growth.

“Airport charges are a vital component in the sustainability of airport operations and development as they enable operators to manage, and plan for, infrastructure that meets existing and future demand for air transport” – ACI World Director General Luis Felipe de Oliveira

“Our Economics Report shows that, though industry revenues continued to grow at the same pace as passenger traffic before the pandemic, revenue per passenger decreased slightly year-over-year since 2015 which is testament to a wide array of competitive forces shaping the industry. This shows the commitment of the industry to keep the cost basis stable, facilitating the further development of aviation.

“This is a clear demonstration that the calls for tighter and rigid economic regulation of airport charges are unfounded as airport charges have remained both stable and reasonable in response to strong competitive pressures.

“Airport charges are a vital component in the sustainability of airport operations and development as they enable operators to manage, and plan for, infrastructure that meets existing and future demand for air transport.

Luis Felipe de Oliveira: “Airport charges have remained both stable and reasonable in response to strong competitive pressures”

“Airports incur capital expenditure, a significant portion of which relates to modernisation of the existing facilities and development of new infrastructure and, in the wake of the pandemic, new investments are needed to ensure sustainable and resilient airports.

“Post-pandemic times will require more technologically-advanced, seamless and contactless processes as for handling passengers, aircraft movements, cargo and baggage.”

ACI World argues that as the industry plans recovery, airport competition will continue to shape the industry and its ability to generate revenues.

De Oliveira added: “Airport costs are largely fixed, partly because of investment in infrastructure but also because of associated operating costs, including those on safety and security, and now hygiene and health, which vary little with the scale of traffic.

“Airlines are making full use of the freedom they have to switch away from airports and with the rapid development of new routes, a large proportion of today’s passengers have a choice between two or more local airports for departure or arrival and also a choice in hub airports for connecting flights.

“The combination of these factors suggests that passengers have a significant and increasing degree of choice over which airport to fly from which represents a competitive pressure for airports that increasingly must make themselves attractive to passengers.”

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