In her opening address, ACI World’s director general, Angela Gittens, reflected on passenger growth and the economic performance of the world’s airports in 2014.
Noting that global passenger growth increased by 4.9% in 2014 and industry income by 5.4% in 2013 to $131 billion, she told delegates: “The traffic headline is the overall resilience in the demand for air transport in the face of the economic, geopolitical and health risks that prevailed in 2014.
“The growth story over the last few years has really been about emerging markets and developing economies, and this is still true, although this growth is more muted than in years past and some of the advanced economies are showing improvement.
“The economics headline is that while the industry as a whole looks profitable, this is primarily true for the world’s major commercial airports. The majority of airports are small and that majority is loss-making.”
Citing the Preview Edition of ACI’s 2014 Economics Survey, premiered at the event, she revealed that Europe’s airports hold the greatest proportion of global airport income (38%) – despite the weakest year-on-year growth in overall revenues of just 2.3% – followed by Asia-Pacific (28%) and North America (22%).
Retail continues to be the leading source of non-aeronautical income for airports at 27% of the total followed by car parking (20%) and real estate (18%).
ACI’s global leader also didn’t waste the opportunity to remind the legislators, politicians and decision-makers in the audience that 67% of the world’s airports operate at a loss.
“While the airport industry as a whole is profitable, with airports posting net profit margins in the realm of 16% in 2013, 67% of airports globally operate at a net loss,” said Gittens.
“Eighty per cent of airports with fewer than a million passengers lose money. Looked at another way, of the airports that reported a net loss in 2013, 93% have fewer than a million passengers.
“Industry profitability is primarily driven by the 20% of airports that carry the bulk of passenger and cargo traffic. Size still matters.”
Outlining the opportunities and challenges facing Asia-Pacific’s airports, ACI Asia-Pacific’s regional director, Patti Chau, remarked: “The biggest challenge faced by airports in our region is coping with growth.”
She cited the growth of low-cost carriers (LCCs) across the region as a significant factor in the continued rise in demand as they had helped make air travel more accessible to millions.
However, she also noted that their growth – LCCs today account for 25% of the market compared to just 5% a decade ago and provide 60% of all aircraft seats in South East Asia – had created a series of operational, infrastructure and capacity challenges for airports.
And she announced that she expects the LCCs to continue to set the pace for the foreseeable future, particularly as the Chinese government recently changed its policy to become more supportive of LCC development.
Chau concluded by noting that private sector influence on airport development continues to grow throughout the Asia-Pacific region through airport concessions, BOT projects and PPP transactions delivering significant economic benefit to cities and regions.
She predicted that up to 49 new airports could be privatised or benefit from private sector funding to upgrade their facilities in the next five years, naming countries such as India and the Philippines as nations open to third-party investors.
In an upbeat presentation, ACI Europe director general, Olivier Jankovec, told delegates that 2014 had been a strong year for the continent’s airports in terms of traffic recovery despite the political and financial unrest in parts of Europe.
He also spoke of the importance of the EU’s new aviation package, which is due to be introduced later this year.
Going into more details about it in a press conference, Jankovec stated: “We are expecting a paradigm shift in the EU’s aviation policy to boost connectivity for Europe and unleash the value of aviation for the economy and job creation.”
He said that if the aviation package followed the lead of the Juncker Commission this would mean less regulation as opposed to the tendency to over-regulate, but “doing more when it can add value”.
Jankovec noted that the fact that the aviation package is one of the top 23 priorities of the European Commission “represented a major change in attitude towards aviation and recognition that it is good for the economy”.
“This is a new and welcome development because if you look at the treatment of aviation by previous commissions, it seems as if they were more interested in capping its growth rather than supporting it,” he said.
London City Airport CEO and next ACI World chairman, Declan Collier, reminded everyone that these are exciting and pivotal times for London’s airport system.
“In just a few months’ time the Airports Commission will decide the future of the London airport system in terms of where the capacity will be put to serve the capital for the next 30 to 40 years,” he commented.
“It is currently the world’s busiest airport system, welcoming 140 million passengers last year. However, we are running out of capacity and the decision where any new capacity goes is critical.
“In Europe alone, the aviation industry is responsible for €680 billion worth of GDP per annum and employs more than 12 million people. In the UK a million people are employed and £52 billion worth of GDP is created every year by aviation. We are a big and important industry.”
The conference began with a keynote address from the World Bank’s senior director for transport, information and communications, Pierre Guislain, and ended with an exciting retail/F&B-focused debate about ‘supercharging non-aeronautical revenues’.
In between there were a number of interesting and informative sessions on everything from ‘future structure of the airline industry’, ‘regulatory frameworks – best practice and new thinking’ and ‘managing risk’ to ‘the economic multiplier’ moderated by the World Bank’s effervescent lead air tr