As the airport business looks for a path to recovery after COVID19, Airports Council International (ACI) World has reviewed industry KPIs and believes that competition will ensure passenger choice, not more regulation.

This week, the airports group published its 2021 Economics Report* and industry Key Performance Indicators. The study explores the fundamentals of the industry with detailed analyses of airport activity for the FY2019, the full year before the advent of the pandemic in 2020.

“Competition will continue to shape the industry as it recovers from the pandemic,” states ACI, based on the report’s data. “As airport competition has intensified, aeronautical revenue generated from airport charges per passenger remained stable, increasing at the same pace as global air transport demand.”

In 2019, total airport revenue reached $181 billion, up from $178.4 billion in 2018. The 1.4% increase was well below the 3.5% increase in air traffic over the same period, which ACI says “testifies to a real decrease in airport revenues on a per-traffic unit basis before the catastrophic losses brought on by the pandemic”.

Competition is Shaping the Industry

ACI World director general Luis Felipe de Oliveira (pictured above) comments: “Though industry revenue continued to grow at the same pace as passenger traffic before the pandemic, revenue per passenger has decreased slightly year-over-year since 2015 which shows that a wide array of competitive forces are shaping the industry. This demonstrates the commitment of the industry to keep the cost basis stable, facilitating the further development of aviation.”

The director general, appointed a year ago, adds: “This clearly shows that 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.”

A big portion of capital expenditure at airports relates to modernization of existing facilities and the development of new infrastructure. In the wake of the pandemic, extra investments are likely to be needed, especially as airports build in post-COVID resilience and become more sustainable.

Changing Priorities

“Post-pandemic times will require more technologically-advanced, seamless and contactless processes for handling passengers, aircraft movements, cargo and baggage,” says de Oliveira. “Airport costs are also 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.”

ACI argues that airlines are able to flex more easily, switching away from airports with ease. And with the rapid development of new routes pre-COVID, a large number of 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,” notes de Oliveira.

* ACI World’s 2021 Economics Report includes data from more than 950 airports of all sizes, and business models in all regions, which represent 81% of worldwide air traffic.