Global airport construction and investment report mid-2024 – Part 1 – Intro, Asia Pacific & Europe
It is over two years since CAPA - Centre for Aviation published its last global airport construction and investment survey; one of several such reports during the past decade. At that time, many construction activities were suspended, or had been cancelled altogether, in the midst of the COVID-19 pandemic, although in some instances they did continue.
It might have been hoped that there would be a turnaround latterly on the basis that the pandemic, while still active, has been marked down to one of a relatively minor inconvenience in most countries, with travel restrictions absent today also in the vast majority of cases.
But the world is governed by events such as the invasion of Ukraine, and also the knock-on effect on supply lines, business and inflation well beyond that country's borders. All of these have contributed to an ongoing economic downturn.
Consequently, while the full impact of the pandemic will take years yet to play out, in the near term it has reshaped the entire infrastructure industry in four ways: intensifying its focus on operational resilience, the affordability of that infrastructure, the deployment of new technologies, and the need for sustainability.
Those are important reasons why infrastructure investment in both existing and new airports has close to halved since before the pandemic.
This is the first of a two-part report into where construction and investment in the airport sector is focused at present, including an introduction and a deeper dive into the position in Asia Pacific and Europe.
The subsequent second part will look at the Americas, Middle East and Africa.
- Construction activities at airports took a back seat during the COVID-19 pandemic and have not fully recovered.
- The war in Ukraine, investor caution in this and other sectors, and a lack of major projects haven’t helped.
- Those activities have fallen from close to a trillion dollars (USD 1,000,000,000,000) in committed investment before the COVID-19 pandemic to less than USD500 billion now.
- Asia Pacific leads in the number of airport projects and investment committed to existing and new airports.
- Six of the top 10 airport projects at existing airports in Asia Pacific are in China.
- The largest projects at existing airports are in Europe – London Heathrow Airport – and in Asia Pacific – Hong Kong International Airport.
- The Russian Federation is the largest contributor to both existing and new projects in Europe.
- The largest new airport projects are in Asia Pacific – Long Thanh Airport (Ho Chi Minh City, Vietnam) – and in Europe – the New Central Polish Airport new Warsaw; both of them very long-term ones.
- Vietnam's Long Thanh Airport is the world's most expensive greenfield airport, costing over USD16 billion.
- The entire scenario can change rapidly; the confirmation of the new Lisbon airport in Portugal resulted in its estimated cost rising more than tenfold from the original estimate.
Construction activities at airports took a back seat during the COVID-19 pandemic
It is just over two years (Mar-2022) since the last CAPA - Centre for Aviation airport construction and investment report, and there have been some changes.
Construction of, and investment in, airports took a back seat during the COVID-19 pandemic, with some operators choosing to suspend even the design stages of major new terminals, while a smaller number of others ploughed on regardless with current projects. Few new ones saw the light of day, and runways hardly entered the discussion.
And indeed that is still the case.
In the first days of Jul-2024 Amsterdam Schiphol Airport announced that the land reservation for a new runway parallel to the Kaagbaan runway had been definitively cancelled. Land had been reserved for the construction of a parallel Kaagbaan for more than 20 years. The decision has much to do with noise displacement and other issues at Schiphol, such as flight capping, but might have gone ahead if finalised before the pandemic.
Investment levels in airport projects have shrunk over the years, from USD800 billion to USD330 billion
At the commencement of the previous report a global airport infrastructure investment figure of USD800 billion was mentioned, arising out of the report that preceded that one (2018), but it concluded that figure had diminished considerably during the pandemic years, to USD566 billion.
And that figure threatened to be worsened further by the outbreak of war in Ukraine, which had just taken place - although in retrospect, its impact has been limited to airlines in Russia and those that use its airspace, rather than airport operators (apart from within Ukraine itself, of course).
How is the sector coping with the renewed demand for travel in most parts of the world and the changing nature of aircraft supply, one that could worsen if Boeing's difficulties are not resolved?
This feature reports on some of the comprehensive data contained within the CAPA Airport Construction Database (ACD), one of several components of the airport-related suite of products offered by CAPA - Centre for Aviation, and one that also includes the Global Airport Investor Database, Airport Charges Comparison and Traffic Comparison.
What follows is the first of two reports on the top level projects at existing airports and in the construction of new ones. There are hundreds of other projects listed in the databases.
It follows a similar format to the Mar-2022 report, but is a little more concise.
The first observation is that the total number of known incomplete projects at existing airports globally listed in the ACD has continued to fall, to 433, at a value of USD331 billion. (As of 01-Jul-2024).
A project in the database is usually a major piece of construction, such as a runway, terminal, ATC tower etc., or combinations thereof, and searching that database can be segregated by project type.
Reasons include the pandemic, the Ukraine war, the downturn in M&A activities generally and in the airport sector specifically, and a lack of top level projects
A major reason for this reduction is the completion of many outstanding projects during the pandemic and the expiration date for projected projects having been reached during that period too, suggesting that a significant number of them were abandoned during that time and have not been resurrected in the aftermath, despite the rapid increase in passengers back to, or close to, pre-pandemic levels in 2023.
Another factor is the downturn in financing and M&A activity, both generally and specifically in the airport sector, which must have had an impact on infrastructure investment.
Lease concessions often go hand-in-hand with requirements to build important infrastructure rapidly, and there have been few such new concession deals recently. Most of the limited activity taking place is in on-sales, where such demands are less stringent or do not apply at all.
And finally there have been hardly any major projects or major new airport announcements made since before the pandemic. A new airport in a major city like Istanbul (completed) or Beijing (completed) or Mexico City (abandoned) or Ho Chi Minh City (in train) can easily cost USD10-25 billion.
The following four charts are of:
Chart 1. The number of airport construction projects of all kinds (runways, terminals etc.) that are known to be under way and incomplete, as of 01-Jul-2024.
Chart 2. The investment value (in USD) of those projects.
Chart 3. The ratio of projects by region.
Chart 4. The ratio of expenditure by region.
Chart 1: number of airport construction projects of all kinds (runways, terminals etc) known to be under way and incomplete, as of Jul-2024
Chart 2. The investment value (in USD) of those projects
The Middle East is the location of fewer but bigger construction projects
The immediate takeaway from those two charts, and confirmed by the pie charts below, is that there is no clear correlation between the number of projects and their value apart from in the Middle East, where grands projets already predominated before confirmation of the expansion of Dubai World Central was made public in May-2024.
(NOTE: The Grands Projets of François Mitterrand was an architectural programme to provide modern monuments in Paris, the city of monuments, symbolising France's role in art, politics and the economy at the end of the 20th century.)
Thus the Middle East accounts for only 1.5% of projects at existing airports but 13.3% of investment.
Chart 3. The ratio of projects by region
Chart 4. The ratio of expenditure by region
Also evident is the relative paucity of construction project activity in Latin America and Africa but there is a rider.
The number of projects in Africa is higher than in the Middle East, but Middle East expenditure is much higher than in Africa, contrasting the very small scale projects typically found there and the much bigger ones in the Middle East (as mentioned earlier).
CAPA - Centre for Aviation provided several examples of Middle East construction projects in 2023 with reports on, inter alia, Bahrain, Kuwait and Sharjah airports.
Asia Pacific leads the world in the construction of new airports; North America is a giant nothing burger
Turning to the construction of new airports, there have been changes there too - but with the notable exception of North America, where new airports have not featured at all in the landscape there for many years. That is, unless they are conversions of general aviation facilities into commercial ones, which might increase in line with the growing number of public-private partnership (PPP or P3) deals in the USA, which prompt large scale investment in terminals, which then renders them recordable as a 'new airport'.
Indeed, the number of new airport projects in the entirety of North America is now down to just two.
Asia Pacific easily leads the regions by number of projects (60%), the rest of the world together amounting to only 40%.
New Airports under Construction - projects
Resistance to new airports in Europe persists
The lead Asia Pacific has over Europe is evident.
Such is the degree of resistance to any variety of airport expansion in Western Europe, that it is hard to imagine any new one being sanctioned today, and it is no surprise that the largest such project is in Poland. But that will not be completed until into the next decade, and still has numerous hurdles to overcome.
In fact, the number of new airports in Africa is close to the European total, and Latin America isn't far behind.
The chart for investment in these projects follows a similar pattern, the only notable difference being an even greater lead by Asia Pacific over Europe, while the level in North America (USD1.4 billion) is barely noticeable on the chart.
New Airports under Construction - Investment
The grand total of existing or new airport projects is far less than in previous reports, but Asia Pacific thrives, courtesy of Chinese projects
In total, there are 575 existing or new airport projects at a total value of USD488 billion that are known to CAPA - Centre for Aviation.
The investment at existing airports in Asia Pacific amounts to 170 known projects, at a value of USD217 billion.
Construction projects for existing airports: location
Asia Pacific covers a wide area (Oceania is not segregated here), from the Ural Mountains to New Zealand, and a very wide range of airport infrastructure activity is to be found.
The table below is taken directly from the ACD, and lists 10 of the largest current projects by the total investment amount.
Six of the top 10 Asia Pacific projects at existing airports are on the Chinese mainland and one third of airport infrastructure expenditure in Asia Pacific is there, too
Historically, China has figured highly in this table, and five of the 10 projects here are in that country, plus one in Hong Kong, presently the largest in the world by the size of the investment (USD19.3 billion) and where the three runway system and numerous other projects will be completed by the end of 2024.
Top 10 existing airport projects in Asia Pacific by level of investment
Apart from the Chinese projects others of note are in Bangkok and Seoul, the former having been agreed since the pandemic and the latter the completion of a four-stage process that dates back to the end of the previous century.
It may be worth looking specifically at China, where there are known to be 25 projects at existing airports, valued at USD68 billion, which is over one third of the entire expenditure in Asia Pacific. The first 14 of those projects are valued at over USD1 billion.
Investment in new Asia Pacific airports is close to the level in existing airports and includes the world's most expensive greenfield one
Turning to new airport projects, there are 90 of them known of in the region, with a total investment of USD121 billion.
Top 10 new airport projects in Asia Pacific by level of investment
In this instance the largest projects are in Vietnam - the lengthy Long Thanh airport one, which is easily the world's most expensive greenfield airport project, at almost USD17 billion - also in Manila, Philippines, and in South Korea, where two separate projects account for more than USD17 billion in investment.
Australia also appears in the table, with the Western Sydney Airport, one of very few new airports in Oceania, along with the 'New Melbourne Airport' which increasingly appears less likely to be built, at least before 2030, but which remains within the Victoria state government's ambitions and its master plan.
As for China, there are 22 known new airport projects there, with a total value of USD19.6 billion, and all but four of them valued at USD0.5 billion or less.
ACI Europe perceives a need for EUR360 billion in investment by 2040
Moving on to Europe, the second largest region for projects and investment at existing airports and joint second for new airports, there are 173 known projects at existing airports, roughly split 50:50 between West and East Europe.
Many airports there paused investments in the wake of the pandemic and now need to catch up - even though less than half of Europe's airports have actually fully recovered their pre-pandemic volumes - especially where there are environmental considerations.
With accumulated debt standing at EUR130 billion, there are calls for airport charges not only not to be frozen or to decrease, but to increase to sustain the Airports Council Europe estimate of EUR360 billion investment needs by 2040.
Construction project for existing airports: location
Huge number of Russian construction projects skews European statistics
Again, geographical perceptions might be confusing.
Europe is even bigger than Asia Pacific, and includes Russia, the world's largest country which stretches to the Pacific Ocean in the east; and Greenland (a Danish territory) in the west, which is as close as 50km (30 miles) from Canada on its northwesterly coastline.
(Note though that while Greenland is geopolitically part of Europe, it is regarded as being in North America for these purposes).
In fact, the ACD lists 41 projects alone in the Russian Federation, an amount that is likely to increase in line with government statements and the increasing presence and ambitions of private sector operators that are based there.
The largest ones are at three of the FLAP airports
The largest airport projects, though, are to be found mainly in Western Europe.
Three of the FLAP airports as they are known (Frankfurt, London Heathrow, Amsterdam and Paris Charles de Gaulle) are to be found in the top three placings. London Heathrow leads the way, with committed expenditure of almost USD23 billion through to 2028.
There is also large scale investment at London Gatwick Airport, which has recovered from being knocked back by the Airports Commission report which identified Heathrow as the location for a new runway for southeast England and which is, inter alia, now seeing to bring a taxiway into service as the runway it once was.
Overtourism is a factor that could influence airport growth projections and investment in Europe
One interesting inclusion in the table is Iceland, where the main Keflavik Airport serves a population of less than 400,000 people, and where the capacity will be almost tripled. Mass tourism on a monumental scale, rather than indigenous travel demands, have necessitated an infrastructure commitment of USD2.2 billion through to 2040, as that airport punches well above its weight internationally.
But as demands to halt 'overtourism' grow in Europe, including Iceland, is that commitment realistic?
Top 10 existing airport projects in Europe by level of investment
The two main new airport projects in Europe are in Poland and Portugal, but neither will open until the next decade
As was previously mentioned, new airport construction activity in Europe is low, to the degree where three of the top 10 projects are in the Russian Federation, including one at Omsk, where a concession agreement was signed on 07-Jun-2024.
Apart from the New Central Polish Airport (USD8.6 billion) - where a building permit won't be issued until 2026, and where the entire project is being reassessed by the Tusk government - and the new Lisbon airport, no single project will cost more than USD700 million.
Intriguingly, two of the new airports are being built in Norway, a country that is heavily reliant on air transport because the landscape precludes the building of roads and railways in some parts, and journey times can be slow.
The new airport for Lisbon is a project that has existed on paper for decades, while the location has shifted from one place to another and back again. Recent (May-2024) confirmation of the project has hiked up its cost from a long-anticipated USD0.5 billion to USD6.55 billion, which is the cost of the first two stages (two runways) to be completed by 2031.
The airport, which may eventually have four runways, is still scheduled to open in 2034. The cost will probably rise materially again long before then, and Lisbon is a good example of how the CAPA - Centre for Aviation Airport Construction Database can only be taken as an indicator of events and costs, since both can change dramatically and suddenly.
Top 10 new airport projects in Europe by level of investment
From the CAPA - Centre for Aviation archive - previous reports links
MAR-2022: Airport Construction and Investment Review 2022 Part 1 - Asia Pacific and Europe
MAR-2022: Airport Construction and Investment Review 2022 Part 2 - the Americas, Middle East, and Africa