Global Airport Outlook 2020: Growth to resume, modestly

Airline Leader

As a new decade dawns Airline Leader examines some of the issues facing airports and some of the opportunities open to them.

They include the continuing advance of the low cost segment, consolidation in the full service segment, privatisation or the lack of it, car parking revenues and the threat they face, air versus rail and air+ rail, the prospects for private terminals, technological advances and the problems they can create, the continuing impact of the 'sharing community', UAVs, developments in security and, not least, the seething hatred towards the entire sector that is being generated by eco-warriors.

What sort of traffic will airports handle in the new decade?

As numbers of first time flyers increase, it is not unreasonable to expect there will be more Low Cost Carrier (LCC) capacity, around the world.

LCCs offer the prices (or at least the expectation of prices) and convenience which new entrants to the 'middle class' demand. The growth of this segment has continued in 2019.

The percentage of global LCC capacity (seats) rose from 32.5% to 32.9% between 2018 and the first 10 months of 2019 in the category 'within regions' and from 12.7% to 13.7% in the category 'to/from regions', in both the cases the highest budget sector impact ever recorded.

  • The growth of low-cost carriers (LCCs) is expected to continue, driven by increasing numbers of first-time flyers and the demand for affordable prices and convenience.
  • Consolidation among full-service carriers (FSCs) is likely to occur, but not necessarily more alliance activity.
  • Airports need to adapt to the increasing shift towards hybridity, as budget airlines bundle services and FSCs downscale their own services.
  • Privatization deals for airports are not expected to increase significantly, with exceptions in Brazil and Japan. Public-private partnerships (P3s) are becoming more common in the US.
  • Car parking revenues remain important for airports, despite challenges from ridesharing and environmental concerns.
  • Airports should consider investing in multi-modal terminals to facilitate air-rail services and cater to the demand for environmentally superior travel.

The future of the low cost long haul model hangs in the balance. Much will depend on the provision of the Boeing and Airbus aircraft that are needed to ensure its success.

At the same time, it would be realistic to expect that there will be more consolidation among Full Service Carriers (FSCs) although not necessarily more alliance activity, which is a different thing. While the mythical 'five airlines of consequence in Europe' or anywhere else for that matter may still be some way off, events in the US have shown that consolidation to that degree can occur.

Plenty of room for more consolidation?

While there is distinctly a 'big four' airlines category in the US there is nothing like it yet in Europe and Asia Pacific.

Airports will need to plan accordingly for not only these two trends but also the increasing shift in the direction of hybridity as budget airlines begin to bundle services while FSCs continue the downscaling of their own services.

As in George Orwell's 'Animal Farm': "The creatures outside looked from pig to man, and from man to pig, and from pig to man again: but already it was impossible to say which was which."

This will mean less demand for specialised terminals, especially low cost ones, and more for a catch-all approach. There are of course leaders in this field already, such as Singapore Changi, which now caters equally to different business models in its terminals despite almost a quarter of its capacity being on LCCs.

That same airport is also a leader in the provision of self-connection, along with others such as London Gatwick. All but the smaller, remote airports will need to cater for self-connection, which is a commonplace offer on reservation portals such as Skyscanner, with often two or more separate point-to-point sectors offered to facilitate a journey.

The gloomiest prediction is that smaller airports of one million passengers per annum or less will continue to struggle and some will go out of business. Budget airlines will continue to seek higher yields by attracting business passengers who prefer city airports that are closer to downtown business districts.

Financing and privatisation

It is a thin time for airport privatisation deals and there is no sign of a big increase in them.

There are exceptions such as Brazil, where the government is coming towards the end of its original remit with the sixth and seventh concession tranches there, and small regional airports are next on the list. Interest in those is more likely to come from local firms rather than international ones.

Another exception is Japan where the privatisation process has gathered steam over the last five years. The seven Hokkaido island airports are expected to be transferred to an operator in Mar-2021 and smaller airports such as Kitakyushu, which was the first to target what were then few LCCs in Japan, have been identified as "suitable for privatisation." Potentially almost 100 airports in Japan could be privatised as the government seeks more budget airlines and the foreign tourists that it believes private operators can generate.

Elsewhere, the privatisation of Groupe ADP by way of the sale of the French government's share could be agreed. It is subject to a referendum process. The sale of the government's stake in Athens Airport will also be up for grabs while another six airports in India will be concessioned out.

Smaller airports will continue to come to market in Europe and elsewhere, including parts of Southeast Asia such as The Philippines and Indonesia, mainly as concessions.

But overall, and while global operators like Vinci will always have an eye for the main chance, the 'big transactions' of the past are not likely to be repeated in the immediate future. Most of them are done, and on-sales such as that at London Gatwick (2019) are rare.

The other exception is the US where public-private partnerships (P3s) are becoming an accepted manner of 'privatising' an airport where leasing wasn't.

There are at least 15 active P3 deals, mainly involving terminals (but one at Denver recently collapsed - the deal, not the terminal) while also increasingly ancillary infrastructure such as people movers and consolidated car parking facilities.

Flying the flag for leasing is St Louis Lambert Airport. If that deal were to be authorised (many of the city's politicians are against it) it could rekindle interest across the country. If it fails the airport privatisation programme that dates back to 1996, and which was revised positively by the Trump Administration this year, will probably go down with it.

Alternative revenue streams: car parking

The previous year's Airline Leader overview of airports mentioned the ever-increasing importance of car parking to the bottom line and it has not abated.

There is a dichotomy here because airport car parking is under attack from several sources including ridesharing and an environmental movement (see later in each case) which would rather see passengers on trains (even to the airport) and even if those trains are belching out diesel fumes and harmful particulates.

But car parks are still revenue gold mines. In some cases up to a quarter of all non-aeronautical revenues are emanating from car parking at the US airports, which together with car rental activities generate over USD6 billion per annum, and other countries are catching up fast.

Multi-storey beats flat land hands down of course unless the flat land comes free of charge and there is plenty of it, as is sometimes the case in military airfield-to-civilian conversions. However, in order to maximise revenues, investment must be made in yield management technologies (directly or through third-party managers) and in premium car parking products.

A single hourly/daily rate is as inappropriate as a single fare type is to an airline and it would not be a big surprise to see airlines entering this business as third party suppliers, developing loyalty programmes to combat the threat from ridesharing.


The demand for air/rail services will be driven as much by the environmental-political demand for short distance passengers to be forcibly transferred to rail services as by anything else.

That is happening in Europe and it will inevitably spread.

Already many airport operators and even airlines are acknowledging that some short haul flights could be replaced by rail services. The problem is, that might not be appropriate to major hubs where airlines are operating connecting flights as much as point-to-point services and where the entire hub & spoke principle would be threatened by rail strikes leaving no realistic public transport option.

It is for those reasons one might expect to see more airports (and airlines?) investing in multi-modal terminals that enable rail branch lines to operate into the airport thus facilitating environmentally superior travel from the downtown area and suburbs. A good example of an expanded facility is Los Angeles; long home to the private motor vehicle.

When its new metro (light rail) station (Aviation/Century) opens in 2020 LAX will be served by two separate lines covering large parts of Los Angeles directly or by transfer and including the downtown Union rail station.

Private terminals

A few airports have experimented with the concept of a private terminal where passengers travelling on regular commercial services (not business jets) pay extra to buy preferential treatment in a designated terminal of their own with transfer to the aircraft by private vehicle.

Indeed, Los Angeles again is one of them, where an annual membership fee is in place supplemented by per-day charges for very 'high level' membership.

Numerous eyes will be on Manchester, UK which opened its PremiAir Terminal in 2019, a less exclusive facility charging from GBP50 to GBP100 per person, per visit. Many people will pay more for the exclusivity they feel they deserve while they cannot use main terminal lounges (e.g. they are travelling on a budget airline).

Revenue levels could be high but there will be extra costs (e.g. transfer by limousine or designated bus to the aircraft). The success of the venture also depends on how many airlines (for which this is an alternative to their own lounge although they must pay for it) sign up to the scheme. At the time of writing, there are 21


New technology is 'driving' all industries and airports are no different.

The global market for technologically 'smart' airports is expected to reach USD13.5 billion in 2020, a heavy price tag.

The sector needs to be wary though of introducing what can be unproven technology for the sake of it, to attempt to be as 'sexy' as the airlines, or to establish 'bragging rights'.

Smart airport solutions being adopted by airports around the world include smart gates; beacon technology; mobile devices to navigate the airports; face recognition systems; air traffic management, baggage and check-in management; IP-based security monitoring, communications, ticketing, and information systems; freight operations information systems; and air traffic management and airways analytics.

The customer-centric ones, and especially those concerning security (see below), are the ones most likely to face a backlash from a general public which is becoming increasingly wary of the surveillance society. There must always be an adequate back-up in case the technology fails; a 'Plan B'. Too often, airports don't provide it.

On the other hand, technology can be used proactively to promote the city/region that the airport serves, to create that all-important 'first impression'. This is already manifested in digital advertising, which can be configured rapidly to its suitability for different types of passenger (business/leisure etc). In the same way, display modules can be used to promote tourism information to leisure visitors, specific information to those arriving for, say, a sports event, and then business facilities to incoming passengers, for example, a big conference.

The Norman Y Mineta Airport in San Jose, California (Silicon Valley - where else?) has just become the US's first airport to offer all-digital advertising.

Airports should aim to become stress-free environments in 2020, an extension to the holiday or business trip experience rather than an object along its path. Right now they are often far from that goal. New technology can help them do that, but human experience and judgement should always be brought into play to determine how it is applied and controlled.

The sharing community

While the likes of Uber and Airbnb have their problems there is no sign of the philosophy of the sharing community going away or even slowing down.

Airbnb has begun to move into the hotel sector while hotel operators such as Marriott, Accor and Hyatt are going the other way. This is bound to impact airports as business models evolve and speculators move in, building multi-purpose units in their vicinity. Moreover, Airbnb continues to find itself being dissuaded from operating in major cities such as New York because of the impact on local housing and for that reason will probably seek more outlets closer to airports.

As for the Transportation Network Companies such as Uber and Lyft and their clones around the world, they will seek greater integration with the transport modes operating at airports, be they scheduled services, charter flights, business jets, helicopters or general aviation. 'Flying taxis' aren't going to appear out of nowhere, but trials are taking place as this is written and as soon as that model works it will be introduced as rapidly as it can be within regulatory constraints. (See also 'Safety and Security' below).

Safety and Security

Apart from the ever-present danger of terrorism, the threat from Unmanned Aerial Vehicles (UAVs), typically drones, the unauthorised flying of which has closed down airports such as London Gatwick and Dubai International, will persist until legislation exists in every country to outlaw such activities, to punish offenders severely and to disable the machines immediately if they pose a real and present danger.

More than ever the need for leadership from ICAO, a UN agency, is needed because exercising control over UAVs conflicts with the demand of business and commerce, for which UAV's can be highly useful.

Investigations have taken place into how UAVs and UAMs (collectively Unmanned Traffic Management or UTMs) might be integrated into air traffic management (ATM) functions, in many countries. In the UK the main project was 'Operation Zenith', which took place and continues at Manchester Airport involving the airport, NATS (National Air Traffic Services), Altitude Angel, an aviation technology company, and 13 delivery partners from the public and private sectors. Eight different scenarios for UTM utilisation were examined (for example, 'on-airfield delivery' and 'safeguarding' [the detection of unauthorised drones]). Similar work is continuing or anticipated in other countries.

The main development in the arena of airport security will be the adoption and implementation of 3D CT scanning technology which will ultimately eliminate the need to remove laptops, liquids and gels from carry-on bags. It is already in place in some countries, such as Australia, and on trial in several others. The greatest irritant to passengers is long queues for personal and bag checking and successful implementation of this technology, which can increase efficiency by 50% or more, will go a long way to restoring faith in the entire airport process.

But there are always caveats. Such technology can wipe unprocessed film for example, which can have professional repercussions as well as personal ones. The biggest risk is that airports will interpret the technology as a way of making more money, by offering the service as a premium, fast-lane, paid-for product, with those unable to afford it subject to the previous regimentation, making them feel even more disenfranchised.


Airports are as equally in the firing line as airlines for environmental and now 'climate change' protesters as they always have been.

Protest movements such as Extinction Rebellion and Flying Shame are not going away and when they are banned from congregating in cities, as the former has been in the UK, they will seek out softer targets such as runways and terminals, probably learning from the lessons of the enforced closure of Hong Kong's airport by protesters there.