This is the concluding part of a three-part series (which previously covered core trends in the public-private partnership (PPP) market and key regional deals). We look at changes in the Australian market and how Canada’s pension funds might become players in their home-market airports.

Australia is seeing quite a bit of reshuffling of airport ownership, with exits from some regional gateways as two pension funds and a big airport investor reviewed their options in Queensland Airports Limited (QAL) and Perth (PER).

QAL runs Gold Coast (OOL) and three other airports. Between them, the State Super and Australian Retirement Trust (ART), and The Infrastructure Fund (TIF) which is managed by Macquarie Asset Management (MAM), held a 70% stake in QAL this summer but they have decided to sell to a consortium comprising global investment firm KKR and the Skip Essential Infrastructure Fund.

Commenting on the deal, Amanda McMillan, Senior Managing Director at MAM and former CEO of AGS Airports, an asset within MAM’s portfolio in the UK, said: “MAM has been investing in airports since 2001 and has leveraged the expertise of its global teams to help drive QAL’s growth while generating strong returns for TIF investors.

“This is an excellent example of private capital supporting airports to meet growing capacity needs and traveler expectations by investing in upgraded and expanded infrastructure that will serve these growing regions of Australia for years to come.”

In November 2022, OOL opened a modern, three-level terminal expansion designed to flex between domestic and international operations as required. The project doubled the terminal footprint, providing space for future passenger growth. It was planned ahead of the expected influx of international travelers for the 2032 Olympic and Paralympic Games, which are forecast to generate around A$5.5 billion in economic and social benefits for Queensland.

Meanwhile, retirement fund AustralianSuper now has an extra 15% stake in Perth Airport (PER), which was put up for sale by Utilities Trust of Australia. AustralianSuper already had a 5.25% stake in the western Australian gateway, the fourth biggest in the country. PER, which recorded more than 16 million passengers in FY 24, is embarking on a multi-billion-dollar private infrastructure development to deliver new terminal facilities, a new parallel runway, two multi-story car parks, and an airport hotel.

Home Run for Canadian Pension Funds?

In Canada, some promising signs emerged last year from Canada’s Trudeau administration, whose leader is stepping down. It outlined plans allowing Canadian pension funds—which have been active investors in airports in Australia, Belgium, Denmark, and the UK—to consider investment in the Canadian airport sector.

In May, the government pushed forward with ideas that could bring about more flexible infrastructure investment options. They could herald a new era of privatization among Canadian gateways and the country’s pension funds—which hold over C$3 trillion in assets—will likely be the first to take a closer look.

Predictably, there is pushback from labor unions on airport privatization, but in a statement, the Canadian Airports Council (CAC) said: “We applaud the government, particularly in working toward identifying ways Canadian airports can pursue infrastructure investment opportunities to attract capital.” CAC’s president, Monette Pasher, added. “We are pleased to see the government taking steps to clarify options for airport infrastructure investment and look forward to learning more.”

Canada has seen the benefits of PPP investments by its pension funds abroad. In the UK, the most recent upgrades at London City Airport (LCY), including investment in next-gen security scanners, have been attributed to the gateway’s acquisition by pension and sovereign wealth funds, and subsequent cash injections.

LCY is owned by a consortium made up of AIMCo, (Alberta Investment Management Corporation), one of Canada’s largest and most diversified institutional investment managers; OMERS, among Canada’s biggest defined-benefit pension plans; Ontario Teachers’ Pension Plan; and Wren House Infrastructure, a direct infrastructure investments arm of the Kuwait Investment Authority.

The Canada Pension Plan Investment Board (CPPIB) is also eyeing up airports. It has had a 5.64% stake in Aéroports de Paris (Groupe ADP) since 2022 and, this year, appointed Guy MacKenzie to lead its Listed Infrastructure team in London, which invests globally across airport and other transport infrastructure like toll roads, rail, and regulated utilities.

CPPIB president and CEO, John Graham, was recently quoted in Canada’s Financial Post, saying: “We have not invested in airports as much as some of our peers, (but) it’s not due to a lack of interest. We’ll continue to look at assets that become available. Airports are interesting to big institutional investors because there’s a scarcity value to them.”

Regions to Watch

Looking further ahead on PPP, India, China, and Saudi Arabia will be places to keep a close eye on in 2025. Boeing’s latest commercial market outlook from 2023-2042 indicates that total passenger traffic last year would exceed pre-pandemic 2019 by 15%.

By 2042, single-aisle fleet sizes will more than double to 34,000 jets from 16,200 in 2022 thanks mainly to the rise of low-cost, point-to-point carriers. Additional aircraft will invariably drive the need for extra airport capacity from new greenfield airport projects and airport expansions. The infrastructure opportunity is vast and highly visible in some markets such as Saudi Arabia.

The kingdom’s General Authority of Civil Aviation (GACA)  has implemented reforms to bring in private investment. GACA’s president, His Excellency Abdulaziz Al-Duailej, commented: “The regulations will enable the realization of the Saudi Aviation Strategy, which is mobilizing $100 billion in investment from public and private sector sources by 2030.”

Data from S&P Global and Cirium also show that based on urban populations versus available airport capacity, China, and particularly South Asia (mainly India), are under-served. This suggests that more new-build/greenfield airports will spring up. By 2042, both regions will have close to 10,000 jets, exceeding the 13,600 in the Americas and Europe’s 10,600.

India has already rolled out a successful airport privatization program and it is continuing. Nagpur, after lengthy court proceedings, has been confirmed for GMR Airports, as reposted in the airportIR Deal Pipeline, while gateways such as Durgapur, Puri, and a batch of 25 smaller regionals are waiting in the wings in a new phase of privatizations.

Although not a banner year by any means, 2024 and the year preceding have done much to temper doubts and fears brought on by the impact of the pandemic. Not only has traffic bounced back, but the appetite for private sector investment in airports has proven to be remarkably resilient.

Bottom line… the future remains bright for a sector that has seen more than its fair share of turbulence over the past three decades. Onwards and upwards!

• This article is modified from the original in Airport World, the magazine of Airports Council International.