Airports focus on long term investment needs, ACI Conference on airport economics and financing - 12/02/2009

Geneva, 12 February 2009 – The Airports Council International (ACI) held its inaugural airport economics and finance conference this week in London. Speaking to 170 attendees from 42 countries, Angela Gittens, Director General of ACI World, reviewed the state of the industry and the global outlook for immediate and long term demand prospects, while Olivier Jankovec, Director General of ACI Europe, highlighted the latest European traffic results and the urgent need for investing in future capacity at airports across Europe.
Reporting on 2008 global airport traffic results and a newly revised 5-year forecast, Gittens said, “Business downturns and consumer fears have slashed business and leisure travel, and air freight has tumbled in the past 6 months. New pressures in the financial and investment sector are squeezing our capital-intensive airport business, as are airline business decisions to cut capacity, eliminate routes and services, merge and even close down. Erratic times have transformed a dynamic aviation sector into a volatile one.”

In December 2008, worldwide passenger traffic was down by 6 percent compared to December 2007. Freight traffic, a leading economic indicator, declined starkly with a 25 percent drop in international freight for the month, a 9 percent drop in domestic freight for the month and an overall drop of 4 percent for total freight for the year.

Gittens said, “Unfortunately, airports are not the comfortable ‘monopolies’ one sometimes hears about. They don’t get to watch the crisis from the sidelines. They have to pay back their debt, maintain their facilities and keep the highest levels of safety and security even with 5, 10, or 15 percent drops in traffic. During bad times, airports vie more than ever for a shrinking base of airline routes and frequencies. Airlines have no commitment to an airport, but an airport has a commitment to its community. Each airport must adopt solutions that meet its specific situation – there is no one-size-fits-all.”

ACI’s revised traffic forecasts for the next five years are based on new data from airports, OAG bookings and trends, revised GDP forecasts from 40 countries aggregated by region, and a review of four previous recessions since 1974 – with the analytic assumption that the current crisis is more acute than the previous recessions and that this downturn will be deeper and longer. The new forecast confirms that a contraction in 2009 is inevitable, with an estimated 4 percent decrease in passenger traffic, comprised of an acceleration of the downturn in the first quarter of 2009 and a slow stabilisation of traffic during the rest of the year, followed by spotty growth in 2010 and the start of a rebound in 2011.

Gittens confirmed, “With a typical airport facility development cycle range of 5 to 25 years, we still have to plan and invest in difficult financing environments. Airports must continue to diversify revenue structure and risk. In 2008, airports made USD 50 billion in capital expenditure commitments worldwide. In order to meet those commitments to provide airport capacity when the community and the airlines need it, airports need financial partners who share their long term perspective.

“Now is a good time to get back to basics, diversifying one’s risk and revenue structure and investing capital effectively to implement well-timed development programmes. Even in a downturn, perhaps especially in a downturn, airports must not shy away from their responsibility to continue as catalysts for local economic growth, employment and business development.”