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Airport Economics

Navigating Airport Ownership Models – Ensuring Growth and Resilience

Jan 16, 2025

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In this series of five blog articles, we delve into the complex world of airport economics, examining the key economic policy areas that shape the airport industry. From balancing competition and oversight in economic regulation to exploring ownership models and governance practices, each article offers a detailed exploration of the challenges and opportunities faced by modern airports. We also discuss building collaborative relationships with airlines, diversifying income through non-aeronautical revenues, and expanding connectivity through air transport market access. Join us as we uncover the dynamic forces driving the airport sector, ensuring sustainable growth and enhanced service quality for all stakeholders.

“Markets work best when individuals have incentives to innovate and improve,” Milton Friedman, a Nobel Prize-winning economist.

Today, the aviation industry supports 86.5 million jobs globally and contributes $4.1 trillion to global GDP, comprising 3.9% of the world economy. Airports, which facilitate the movement of 9.4 billion passengers annually, are pivotal to global connectivity and economic growth. To finance growing infrastructure needs and address the challenges of the energy transition, innovative ownership and management solutions are crucial.

To meet future demand, global airport capital expenditure (CAPEX) from 2021 to 2040 is forecasted to reach US$2.4 trillion, with US$1.7 trillion allocated to brownfield investments (upgrading existing infrastructure) and US$731 billion for greenfield projects (new airports)​. This investment is essential for accommodating passenger growth, preventing capacity constraints, and achieving sustainability goals such as Net Zero carbon emissions by 2050.

Airport ownership and the role of private investment

Increasing infrastructure demand highlights the vital role of private investment in airports. While ACI maintains a neutral position on airport ownership models, it recognizes the need for stable, predictable, and consistent legal frameworks to encourage participation from private stakeholders.

According to ACI, in 2023, airports with private capital, including fully private, partially privatized, and Public-Private Partnerships (PPPs), handled 45% of global passenger traffic in 2019, underscoring their significant contribution to the sector. In 2019, airport groups collectively contributed US$74 billion to the global GDP, supporting 2.7 million jobs worldwide​.

This economic impact underscores the value of private investment, particularly in markets where reliance on government spending alone is insufficient.

Private investors have also driven significant CAPEX in airport development. Over the past decade, airport groups invested US$144 billion globally, representing 31% of brownfield investments​. In rapidly growing regions like Asia-Pacific, CAPEX intensity is notably high, reflecting the need for new facilities to keep pace with passenger volumes​. Such investments enable airports to modernize infrastructure, improve efficiency, and meet evolving operational challenges.

To attract continued investment, the ability to recover costs and generate proportional returns remains paramount.

Models such as the dual till arrangement, which separates aeronautical and non-aeronautical businesses for setting airport charges, are instrumental in ensuring financial sustainability while mitigating operational risks.

Exploring airport management models

Diverse airport management models have emerged to address evolving strategic and operational needs:

  1. Standalone airports: Independent airports focus on local demand, operating efficiently under their management structures.
  2. Airport systems: In large metropolitan areas, multiple airports function under a single management structure, enabling resource optimization and improved connectivity.
  3. Airport networks: This model sustains smaller, potentially loss-making airports by cross-subsidizing operations. It is especially prevalent in regions such as Africa and Latin America, where maintaining regional connectivity is a public policy priority​. By pooling resources, airport networks ensure smaller airports remain operational and financially viable.
  4. Airport groups: At the international or multinational level, airport groups operate multiple airports under a single ownership and governance structure. In 2019, airport groups handled 29% of total passenger traffic, 2.7 billion passengers globally—with Europe alone accounting for 1.7 billion passengers. Notable groups include AENA, managing 307 million passengers, and VINCI Airports, with 235 million passengers​.

Airport groups provide significant operational and economic advantages, particularly for smaller airports. By leveraging shared resources, groups enable improved workforce efficiency, as reflected in 30-40% outsourced employment ratios for smaller airports​.

Groups also enhance innovation and service delivery through knowledge-sharing frameworks, helping airports improve performance metrics such as Airport Service Quality (ASQ) scores. For instance, airports joining a group reported 1.3% average annual ASQ score improvements, compared to 0.9% for non-group airports​.

Balancing flexibility and sustainability

Regardless of ownership, airport operators should be free to determine the appropriate management models that are best suited to meet public policy and/or strategic commercial objectives. Flexible models are essential for operational efficiency, financial sustainability, and long-term resilience. Private investment and group models have proven their capacity to modernize infrastructure, address capacity constraints, improve service quality, and support the industry’s ambitious decarbonization goals.

Moreover, airport groups foster innovation and operational improvements by centralizing governance, setting ambitious performance targets, and sharing technological advancements across their portfolios. These measures ensure that airports, regardless of size, can meet evolving demands sustainably and efficiently.

Conclusion and way forward

To ensure a sustainable and resilient airport sector, the following actions are essential:

  • Promote flexible ownership models: States must support diverse ownership structures, including private investment, public-private partnerships, and airport groups, tailored to local needs and economic goals.
  • Create stable and predictable frameworks: Establish legal and regulatory frameworks that attract private investors by ensuring stability, transparency, and consistency.
  • Leverage economies of scale: Airport groups and networks should continue to share resources, expertise, and innovations to enhance operational efficiency and service quality, particularly for smaller airports.
  • Facilitate capital investments: Encourage long-term capital expenditure (CAPEX) programs to modernize infrastructure, address capacity challenges, and meet future demand sustainably. 
  • Balance public policy and commercial goals: Airport management models should integrate public policy objectives, such as regional connectivity and environmental sustainability, with commercial viability.

By adopting these measures, the airport industry can meet the growing global demand for connectivity, drive economic growth, and ensure sustainable operations that benefit stakeholders worldwide.

My acknowledgments to Patrick Lucas, Philippe Villard, and Michael Stanton-Geddes.


References

Airports Council International (ACI) World. (2021). Global Outlook of Airport Capital Expenditure: Meeting Sustainable Development Goals and Future Air Travel Demand. ACI World, in collaboration with Oxford Economics.

Air Transport Action Group (ATAG). (2024). Aviation Benefits Beyond Borders Report.

Airports Council International (ACI) World. (2024). 2024 Airport Key Performance Indicators.

Airports Council International (ACI) World. (2022). Value Creation by Airport Groups: An Oxford Economics Study.

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