View from the top
ACI World director general, Luis Felipe de Oliveira, considers some of the immediate and longer-term challenges facing airports.
The arrival of the Northern Hemisphere summer has marked a new chapter in the pandemic as we continue to make positive incremental steps towards rebuilding global connectivity and returning aviation to the pathway of growth that we were collectively building before.
As vaccinations continue, travel restrictions are being slowly eased, and more passengers are expected to continue return to travel in the second half of the year. We are particularly pleased to hear that Canada will re-open the international border in September and we look forward to welcoming aviation leaders to Montréal for the ACI Customer Experience Global Summit, one of the most important events to return to the industry calendar in 2021.
Aviation is crucial for the global economy and the communities that we serve, as the air transport industry is responsible for around 9% of global Gross Domestic Product (GDP), with the catalytic effect that airlines, airports, the tourism sector, and other players of the industry produce.
The pandemic, however, is far from over. According to the latest Advisory Bulletin, the lasting adverse impact of the COVID-19 crisis is forecast to remove an additional five billion passengers by the end of this year compared to the pre-COVID-19 forecast.
Domestic traffic will continue the recovery started in 2020 to reach close to 3.3 billion passengers by the end of 2021 (61.4% of 2019 levels). Furthermore, ACI World estimates that, globally, airports will suffer the reduction of more than $108 billion (figures in US dollars) in revenue by the end of the year, down by more than half of expectations (-54.6%).
Despite the slower than expected first half of 2021, the recovery of the sector to pre-COVID-19 levels is expected by 2023 for domestic travel and by 2024 for international travel, before resuming long-run passenger growth trends. Projections indicate that close to 19.7 billion passengers will traverse the world’s airports by 2040 – more than double the 2019 air passenger levels.
Airport infrastructure is key to the continued development of air transport which supports millions of jobs and provides social and economic development for the global communities we serve. In normal times, addressing the growth of passenger demand in the face of global airport capacity constraints already poses a significant challenge, but the pandemic has dramatically reduced airport revenues, adding even greater challenges to meeting long-term capacity needs.
ACI World’s recently published study, Global Outlook of Airport Capital Expenditure – Meeting Sustainable Development Goals and Future Air Travel Demand shows the airport industry’s current financial shortfall poses notable challenges to the modernising of infrastructure to improve sustainability and resilience, which will be required if future passenger demand is to be met.
Supported by Hamad International Airport and developed in collaboration with Oxford Economics, the study shows that investment in new greenfield airports, as well as significant investment to expand and maintain existing airport infrastructure will be required.
If longer-term capacity constraints are not addressed through capital investment, ACI World estimates a reduction of up to 5.1 billion passengers globally by 2040. For every million passengers that
airports are unable to accommodate due to capacity constraints in 2040, 10,500 fewer jobs and $346 million less in Gross Domestic Product would be the result.
As we continue to navigate the pandemic, our quest to return the industry to its pathway of growth, and reconnect the world, must be done with sustainability and targeting net zero carbon emissions.
In June, we published our long-term carbon goal whereby the world’s airports are committed to net zero carbon emissions by 2050. To realise this, additional green capital financing will be needed, and to fully realise positive economic, social, and environmental outcomes, innovative approaches, appropriate incentives, and flexibility in organising and securing financing – such as green bonds or public-private partnerships – are required.
Governments will play an important role in supporting and incentivising the recovery and to mitigate the risks of falling short on Sustainable Development Goals linked to airports.
The next five years will be crucial. As the industry recovers, our attention needs to be focused on infrastructure and sustainability to cope with our positive view that the industry will double in size by 2040.
I believe that ACI’s role is as a key influencer and driver of change in our industry. We are stronger together and global collaboration between us and the other representatives of the aviation ecosystem – especially with ICAO, IATA, and our other valued global partners – will be essential for the industry to successfully sustain a balanced recovery from COVID and beyond.