Airport valuations claw back some lost ground, but still not back to pre-2018 levels

There was a time, long, long ago, when investing in airports was all the rage, largely driven by the advent of the 'low-cost' airport' (where 'low-cost airlines' operated), conversions of military facilities into commercial ones, and the advent of the hub-and-spoke system, which ultimately conquered the world after emerging out of US deregulation in 1978 and thereby attracting big league investors like investment funds, private equity and sovereign wealth funds.

But they started to lose their popularity among investors from around the mid-2010s, as an examination of Earnings Multiples in sales transactions (explanation in the text) shows.

There was not a great deal of activity during the COVID-19 pandemic - indeed, many transactions were postponed or put on the forever back burner.

There has been a slight resurgence since, and it has been most notable in the last six months or so, especially in the UK and Australia. But it is exclusively on-sales of equity in freehold property or concessions, rather than new privatisations.

This report looks at three things: overall valuations of sales in multiple sectors; valuations of airports from 2000 to 2018; and more recent valuations.

Its conclusion is that the sector remains entangled in the general malaise that has beset infrastructure as a whole, as well as economic circumstances that vary wildly across continents. And that although it is performing adequately against other sectors (including, as always, the airlines), no big leap in earnings multiples should be anticipated in whatever transactions might emerge in the remainder of 2025.

The halcyon days are over.