Airports must develop non-aeronautical activities

The Airports Council‭ ‬International‭ (‬ACI‭) ‬has launched of two authoritative and globally-significant‭ ‬reference publications‭ - ‬ACI Airport Economics Report and the Airport Key‭ ‬Performance Indicators‭.‬

The publications revealed that the continued recovery in‭ ‬manufacturing and global trade‭, ‬alongside a rise in business confidence‭, ‬has fostered confidence‭, ‬investment and growth in airports across the‭ ‬world‭. ‬The financial analysis is based on a comprehensive sample‭ ‬of 919‭ ‬airports‭, ‬representing 78‭ ‬per cent of worldwide passenger‭ ‬traffic‭. ‬All regions and airport sizes are accounted for‭, ‬providing‭ ‬a truly representative picture of the industry‭.‬

Airport traffic at‭ ‬a world level has grown consistently over the last three‭ ‬years‭ - ‬passenger traffic posted growth of 6.6‭ ‬per cent in‭ ‬2017‭. ‬Furthermore‭, ‬passenger traffic continues to post consistent annual growth‭ ‬rates above historical averages‭. ‬To continue to accommodate this demand‭ ‬and serve their communities‭, ‬airports must have a long-term‭ ‬perspective on their business and ensure capacity improvements‭. ‬This is‭ ‬a challenge because‭, ‬in this dynamic competitive environment‭, ‬airports are‭ ‬forced in the short term to set competitive charges‭, ‬offer‭ ‬incentives and rebates‭, ‬and invest in quality enhancements‭.‬

Increased competition‭ ‬continues to shape the industry and its capacity to generate‭ ‬revenues‭. ‬The report has found aeronautical revenue generated from airport‭ ‬charges per passenger in real terms has remained stable‭ ‬–‭ ‬in‭ ‬the region of US$10‭ ‬per passenger‭. ‬Using aeronautical revenues‭ ‬as a proxy for airport charges‭, ‬charges are increasing globally‭ ‬only at the same pace as global demand‭. ‬This is‭ ‬clear demonstration that the calls for tighter and rigid economic‭ ‬regulation for airport charges are unfounded‭.‬

The report also found‭ ‬that that future growth in air transport demand will come‭ ‬from emerging and developing economies‭, ‬predominantly from the Asia-Pacific‭ ‬region‭. ‬In 2016‭, ‬airports located in emerging and developing economies‭ ‬carried 45‭ ‬per cent of global passenger traffic across the‭ ‬world’s airports‭. ‬By 2040‭, ‬this share is expected to‭ ‬increase to 62‭ ‬per cent‭. ‬

By that time‭, ‬passenger throughput‭ ‬at airports in emerging and developing economies will have 1.6‭ ‬times the passenger traffic of airports in advanced economies‭. ‬The‭ ‬airport cost structure continues to be characterized by predominantly high‭ ‬fixed costs necessary for maintaining and operating infrastructure‭.‬

Airports are‭ ‬asset-intensive businesses that require many years to recover the‭ ‬significant capital investments in runways and terminals‭. ‬The scale of‭ ‬current and forecast demand at airports clearly indicates a need‭ ‬for increasing levels of investment to maintain and enhance capacity‭ ‬at an appropriate level of service quality‭. ‬Airport charges and‭ ‬non-aeronautical revenues are major sources of funds for investment‭. ‬

Airports should be permitted to retain and invest these revenues‭ ‬to finance future investments or to pay to shareholders based‭ ‬on the finances of the airport‭. ‬Our report reveals that‭ ‬the structure of airport revenues has remained stable over the‭ ‬last six years‭. ‬Airports are strongly encouraged to develop non‭-‬aeronautical activities and maximize non-aeronautical revenues where they can‭. ‬Airports are essential to the economic development of cities‭, ‬countries‭, ‬and regions‭. ‬ACI remains committed to help the airport industry keep pace with traffic growth‭. ‬

Angela Gittens    Director General, ACI World

Angela Gittens

Director General, ACI World

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