ACI Media Press Release Archives (2010)

Airports assess the industry’s financial outlook, ACI World and ACI Europe host annual economics and finance conference - 23/02/2010

London, 23 February 2010 – At the opening session of the second annual ACI Airport Economics & Finance Conference, Angela Gittens, Director General of ACI World, emphasized the matrix of critical cost factors that will shape airport investments and financial planning choices as the industry begins to climb out of the 2008-09 economic depression.

Taking a look at current trends, Gittens commented, “Traffic results are improving in all regions, and the emerging Brazil, Russia, India and China (BRIC) markets have led the way, first with increases in domestic and now in international traffic. As a result, our updated outlook for growth foresees a 3 to 4 percent upturn in 2010.

“What we have not revised is that we still live in erratic times, and we face the financial impact of weak airlines, diminishing government relief packages and tight lending markets.”

Gittens reviewed recent financial data from the ACI annual economics survey, pointing out the significant shift in aeronautical revenue sources from aircraft to per passenger charges. She highlighted that airports, despite the difficult economic situation, have held user charges to airlines globally at less than 4 percent of airline operating costs.

Other headline figures in the report include airport operating expenses, which reached USD 55 billion in 2008, consuming 57 percent of airport revenues. She flagged security costs as a significant concern for airports, as they are often decided in reaction to an incident by governments under pressure, with little security risk evaluation and no analysis of the cost impact for airports.

“Capital expenditure continues to rise. All told, the airport industry is managing USD 250 billion in debt and added USD 26 billion in annual capital cost to the airport industry balance sheet in 2008,” commented Gittens.

Demands on airport capital intensive business and airport financial management have broadened over time. Today’s airport manager must balance the investment and service demands of a diverse constituency: airlines, owners, communities, passengers, our management and our staff.

“Airlines continue to pressure airports to help them balance their books,” she noted. “On the one hand, low cost carriers demand no frills facilities, whereas the alliances want consolidated terminal operations and features that suit their business model. Accommodating these changes adds costs to operations, terminal equipment and passenger processing.”

Gittens also pointed to the growing diversity in ownership models coupled with the demand for better business management structures that drive new efficiencies, but also create the need for new sources of investment and new financing models.

Other cost centres included technology investments in I.T. and telecommunications, which will serve as enablers of streamlined passenger and cargo processes. Environmental strategies as well, despite the short-term strain on airport budgets, will help airports achieve long-term savings on energy, reduce noise, and conserve local air quality. Training is another key investment area recommended by Gittens to build staff expertise, performance excellence and high quality customer service standards that meet the challenges of a renewed growth market and heightened capacity demands.

Gittens closed with a call to action, “To meet each of these challenges in a world characterized by constant change, we must marshal our limited resources, investing and spending wisely and work closely with our industry partners to develop shared solutions that will serve our customers more efficiently in the years ahead.”