NEWS Last modified on March 13, 2014

The bulk of the world's airports still operating at a loss – new ACI Economics Report

The profitability struggle faced by the world’s airports was one of the topics under the microscope in the opening session of this year’s Airport Economics and Finance Conference in London.

According to the soon-to-be-released 2013 ACI Economics Report, 67% of the world’s airport’s operate at a net loss.

Indeed, 80% of airports handling less than one million passengers per annum report average net losses of 6%.

And of the airports that made a loss in 2012, 93% of the handled under one million passengers.

The figures prompted ACI World’s director general, Angela Gittens, to remark that “size really does matter", when it comes to profitability.

“While the industry as a whole is profitable, with airports posting net profit margins in the realm of 13%, a significant proportion of airports are actually in the red,” says Gittens.

“Industry profitability is primarily generated from the 20% of airports that carry the bulk of passenger traffic. Size matters.”

In other news, ACI Europe today unveiled fresh analysis on competition within the aviation industry.

This new analysis is the latest chapter of a debate about airport competition which began in June 2012, when Copenhagen Economics and Dr Harry Bush, former UK airport regulator, published the first-ever comprehensive study of Airport Competition in Europe.

That study provided quantitative evidence of the significant extent of airport competition. In particular, it looked at the shift in the airport-airline dynamic resulting from the cumulative impact of aviation liberalisation, new and evolving airline business models, digitally empowered passengers and commercially driven airports.

The new analysis paper released today builds on these commonalities with the objective of moving the debate on airport competition forward.

It refines the way in which the market power of both players should be assessed and considers the impact upon their respective negotiating positions.

And, most notably, it advocates for a more innovative approach to airport regulation in Europe based on trigger regulation or price monitoring – which limits regulatory intervention and incentivises airports and airlines to develop better commercial relationships based on long-term contracts.

ACI Europe’s director general, Olivier Jankovec, comments: “Today, price-cap and other traditional forms of regulation are polarising the airport airline relationship over the single issue of airport charges.

“We need to break the constant cycle of accusation and counter-accusation. That means we need get to a point where we can just do what other industries are doing: negotiate long-term contracts with airlines that best suit each other’s interests.

“This is what trigger regulation is about, as it is essentially based on the threat to regulate – and leaves airports and airlines free to focus on their commercial dealings rather than on lobbying their regulator. 

"This could potentially open the way for expanded cooperation on many issues, including service quality or incremental commercial revenue generation.”

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