10-May-2011 9:39 AM

ACI World sees constraints ahead for airports and airlines

ACI World Director General Angela Gittens, speaking to ICAO Council members about the economic challenges of the global airport industry, stated (09-May-2011) that "the time is right to pursue strategies that further strengthen the industry to withstand future shocks and ensure high quality service for consumers." Ms Gittens said that ACI is pleased that traffic has now returned to pre-economic crisis levels, but warned of two key business constraints: fixed operating costs and high cost of capital.

  • Cost concerns: "In a downturn, these [fixed operating costs and high cost of capital] stay constant whereas airports suffer revenue loss linked to fewer passengers resulting from reduced demand, carrier service and route adjustments, bankruptcies and mergers. During this latest economic downturn, the increasingly diversified portfolio of airport revenues served as a lifeline – a clear sign that airport entrepreneurship is critical in our very competitive global airport market";
  • Airport charges: "We need better understanding from our airline partners so that we can put to rest misunderstanding and specious debate about user charges. Naturally, airports charge for the services that airlines require since they have to spend money to provide and maintain facilities for aircraft to land and park. The global average airline cost of USD4 per passenger is a great bargain. Where can you even park a car for USD4 today?";
  • Capacity concerns: "Within 20 years, traffic is forecast to double. Airports must now build the capacity needed, without further delay to plans for expansion and modernisation. Governments and private investors must not be shy about committing to infrastructure investment that is so crucially linked to economic development." ACI expects a new wave of private sector investment in both developing and advanced markets as "few governments [are] in a position to make major outlays for new infrastructure";
  • Public sector support: "With the considerable risk of capital intensive venture for a private investor, the regulatory framework can become a key factor in the appraisal of airport investments. Developing such a framework takes time and consultations among stakeholders, and is a critical component for winning investor confidence and engagement";
  • Liberalisation: "There is too much cherry-picking in the development of open sky agreements, and too little progress on lifting ownership restrictions. We call on ICAO to champion greater liberalisation so that the global industry can excel on choice, competitive fares and service quality". [more]

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