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ACI World director general, Angela Gittens, provides her thoughts on some of the economic, operational and infrastructural challenges and opportunities facing airports.
According to the January 2020 edition of the World Economic Outlook, the International Monetary Fund (IMF) projects a global growth rise from an estimate 2.9% in 2019 to 3.3% in 2020.
Market sentiment has been boosted by tentative signs that manufacturing activity and global trade are bottoming out, a broad-based shift toward accommodative monetary policy, intermittent favourable news on US-China trade negotiations, and diminished fears of a no-deal Brexit.
Downside risks, however, remain prominent, including rising geopolitical tensions, notably between the US and Iran, intensifying social unrest, further worsening of relations between the US and its trading partners, and deepening economic frictions between other countries.
Against a global economic backdrop that remains quite challenging, worldwide passenger numbers enjoyed moderate growth in 2019 and freight traffic experienced a difficult year, with global volumes decreasing, according to ACI World’s preliminary data.
While remaining resilient in the face of global uncertainties besetting many economies, the air transport sector is also facing pressing issues, such as infrastructure development, amidst major capacity constraints.
Today, just over half of the world’s air routes operate at slot-coordinated airports (IATA Level 3). Level 3 specifically refers to airports where the demand for infrastructure significantly exceeds an airport’s capacity during a relevant period or season.
Based on data from ACI’s World Airport Traffic Report released this past fall, as much as 48% of passengers globally use one of the 204 Level 3 slot-coordinated airports on at least one end of their flight. A significant proportion of Europe’s (71%) and Asia-Pacific’s (61%) passenger traffic passes through Level 3 airports, highlighting the issue of capacity bottlenecks.
The strategic governance structure review of the Worldwide Airport Slot Guidelines promises a transformative effect of the management of existing infrastructure.
Nonetheless, capacity constraints at many of the world’s airports are made more urgent when considering the projected growth that’s in store for air service demand.
The rapid growth of population and urbanisation, rise in the standards of living, and the decreasing cost of air transport, are all ingredients that will continue to stimulate air transport demand and the propensity to travel by air. ACI is working closely with governments and other stakeholders to find creative solutions to close the infrastructure gap in an environmentally sustainable manner.
There is a global need to finance new airport infrastructure to meet future demand and, if government spending cannot be relied upon as it has been in the past, then there is ample evidence of the value created by private investment in airports around the world.
It has been applied globally in important aviation markets, including the mature aviation market of Europe, but also some of the fastest growing markets including, Brazil, China and India. Airport privatisation has become an important investment vehicle for the development of infrastructure to accommodate air service demand; to contribute to community and national economic vitality; and to enhance the customer passenger experience.
That stated, ACI has a neutral position on airport ownership. There is no-one size fits-all to the ownership model of airports given the large variety of social and economic circumstances, needs and objectives across the globe, but positive lessons can be learned from existing privatisation processes, especially where they have been subject to stable, consistent and proportionate economic oversight.
Securing the overall viability and sustainability of a private project requires that governments set appropriate parameters from the very start of the process. This requires a thorough analysis of the market into which airports are being privatised and the evolution of the airport industry as businesses in an increasingly competitive environment.
Individual governments are better placed to set the appropriate strategic objectives and to understand where the private sector is likely to add the most value for their airports. Any economic oversight should consider the level of the investment and the need to generate a reasonable return proportionate to the level of risk taken by the private investor.
ACI remains committed to our advocacy work with ICAO, multilateral organisations and governments to encourage the economic sustainability of the world’s airports and to developing a suite of programmes and services to help our members get the financing needed to ensure that airports evolve in step with the demand for air transport service.