Over the past few decades, the airport industry has experienced a massive wave of privatizations and corporatizations. At the beginning of the 90s, governments worldwide started to open the industry to external investment, prompting a rapid expansion in the number of privatized airports. This phenomenon gave birth to a new management model for airports: the Airport Group.
Airport Groups are multi-airport entities that have intentionally expanded the number of domestic or international airports they operate and own. During 2019, almost 1 in 3 passengers worldwide flew through an airport that is part of this modern form of management.
With the intention of understanding the benefits and reasons behind the impressive growth of Airport Groups, ACI, with the support of Capital Airport Holding of China (CAH) and the technical assistance of ICF and Oxford Economics, launched a research study to dive deeper into the inner workings of the Airport Group model.
There is strength in numbers
Despite being a relatively new trend, as of 2019 Airport Groups account for 29% of global passenger traffic globally, and 23% of worldwide air cargo volumes. Additionally, Airport Groups support 1 in 270 jobs worldwide and represent a contribution of $74 billion dollars in core gross value-added to the global economy.
The benefits of an Airport Group go beyond economies of scale. For instance, smaller airports can benefit from greater knowledge sharing and technological solutions that would otherwise be extremely difficult to develop on their own.
Group structures have also important financial benefits due to increased access to cheaper and more diverse sources of capital, which in turn make individual airports more resilient in times of crisis. Additionally, Group resources support the development and utilization of best practices at the local level.
Airports that join a Group deliver higher quality of services to passengers
The fact that targets and standards are set at a Group level – with a pool of shared resources for their implementation – supports the achievement of high-quality service goals and increases overall operational efficiency. As an example, airports that joined an Airport Group had an average year-over-year increase of 1.3% in their Airport Service Quality (ASQ) score – a benchmark developed by ACI to measure passenger satisfaction – compared to 0.9% for all airports. This means that airports increase their ASQ scores 1.4 times faster than other airports in the years following their joining of a Group.
It is also worth mentioning that Airport Groups foster innovation and develop new technologies – characteristics that could serve the industry well in tackling major challenges, such as investing in environmentally-friendly infrastructure and increasing international connectivity.
Looking ahead: New challenges and opportunities
The aviation industry will continue to face a range of complex, multi-disciplinary, and potentially expensive challenges. Airports will have to adapt quickly to a changing competitive landscape, so it is fundamental for them to have the necessary tools and frameworks to tackle future challenges. Airport Groups deliver a wide range of benefits – from the sharing of expertise and collaboration to the development of new technologies – that bring a lot of value to communities, investors, and airport operators. As such, governments and regulators should consider the Airport Group model as a viable form of management and create fertile grounds for investment in such entities.
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