Five futures for the global aviation industry

Marcus BalmforthBy Marcus Balmforth
InterVISTAS Managing Director

Last week, I attended the ACI 8th Annual Airport Economics & Finance conference in London where the global airport community, aviation and financial experts came together to explore best practice in airport investment, financial management and economic sustainability.

In this short blog, I would like to share with you five important points I took away from the event which showcase future developments and opportunities for our industry.

1. How will airport competition change in the future?

While we can certainly see a shift in the leading carriers’ strategies, we do believe that underlying traffic growth will continue to provide enough market opportunity for the smaller airports. Set in the context of Global Infrastructure Partners’ recent sale of London City Airport for over £2bn, Arnaud Feist, Chief Executive Officer of Brussels Airport Company brought the discussion around to how competition in the industry may change in the future. He felt that in Europe, “smaller regional airports will be the losers as airlines are changing their strategy to move to large airports.”

2. Airports are concerned about the outcome of the EU referendum in the UK

Clearly, the outcome of the UK’s in-out referendum will be closely watched by airports in the UK and across Europe. While the panel in the first morning session was unanimous in promoting the UK staying in the EU, Neil Pakey, CEO of the Shannon Group plc referenced bilateral air transport agreements as a good example of pre-EU membership being significantly more bureaucratic than the current EU membership, where there is one block agreement.

3. Take note, world – Asian aviation just keeps on growing!

The event also highlighted the continuing growth and investment in Asian markets. China has built 64 airports in the last 10 years and has plans to build another 66 in the coming five years. And combined with the fact that low-cost carriers have tripled their seat capacity across Asia in the last 10 years, this growth is only set to continue – and other countries should take note!

4. The World Bank provides an aviation health check

Dr. Charles Schlumberger, Lead Air Transport Specialist for the World Bank gave the conference the ‘World Bank’ health check. Schlumberger concluded that the industry needs to do three things in order to prepare for the future: reduce debt levels, watch for oil price rises and prepare for the impact of climate change now. And we agree – these are trends which could easily be overlooked but will impact on the growth of our industry if ignored. Preparation in these areas is key in order for airports and airlines to implement strategies for both growth and risk management.

5. Privatisation is set to continue

Research by ACI Europe found that 40% of European airports have at least some private shareholders, and that these airports account for around 75% of all air passenger journeys in Europe. This is a sizable increase from 2010, when just 25% of European airports were found to have at least some private ownership. We see this trend continuing over the coming years, with further Public-Private Partnership developments both within the EU (witness the French regional airports) and on a global basis (following the lead of the Brazilian regionals, the Philippines and Japan).

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