ACI Releases the 19th edition of the Airport Economics Report / Paradox: Overall industry is in the black yet most airports lose money
Montréal, 8 June 2015 – Airports Council International (ACI) has released the 19th edition of the Airport Economics Report which covers an in-depth analysis of industry revenues (aeronautical and non-aeronautical) and costs (operating and capital).
“In the face of the ongoing uncertainties in the global economy, global airport revenues remained resilient through the downside risks that have persisted across the world’s markets,” said Angela Gittens, Director General, ACI World.
“Airport revenues experienced sound growth rates in 2013 compared to the previous year. Although there are some regional disparities, growth in key emerging market airports has circumvented the slowdown in the Euro area and other mature markets.” Gittens added that, “Industry revenues as a whole grew by 5.5% from 2012, reaching US$131 billion in 2013.
“The latest data also paint an interesting picture of airport profitability. The industry as a whole experienced a return on invested capital of just over 6%. While a single measure of global airport profitability provides a good barometer of industry health, it often masks the important nuances and industry facts crucial for evidence-based policy decisions. The challenge remains that most airports in the world are small, with high traffic volumes concentrated in only a handful of airports. Therefore, the airport industry faces a conundrum.” said Dr. Rafael Echevarne, Director of Economics and Programme Development, ACI World.
“Although the airport industry as a whole is profitable, most airports are actually in the red on their financial statements. The latest estimates suggest that as many as 69% of airports worldwide operate at a net loss. Most of these airports have fewer than one million passengers per annum. Smaller airports have neither sufficient traffic to achieve economies of scale nor to generate significant aeronautical or non-aeronautical revenue.
“These results have important implications for national regulators involved in the economic oversight function of airports. Given that airports are asset-intensive businesses, they require large investments just to accommodate a single aircraft landing. Despite the important social and economic development that airports generate both for local communities and with respect to global trade, market size (in terms of traffic throughput) largely determines the financial health and viability of an airport.”
Echevarne added, “Taking this into consideration, there is no “one size fits all” approach for airports, irrespective of their location, ownership model and till regimes. Each airport has a different set of challenges, opportunities and circumstances. In turn, with an objective for sustainable development, this should influence how each airport is regulated.”
Gittens continued: “International tourism, in particular, was irrepressible in 2014 considering the geopolitical risks that have persisted in certain parts of the world such as Eastern Europe and the Middle East as well as the Ebola outbreak. By and large, the international traveller in 2014 appears to have withstood the challenges.
“As well, air cargo rebounded after almost three years of growth stagnation whereas passenger traffic continues to post growth in the realm of 5% year after year following the Great Recession.”
Key airport industry facts for the 2013 financial year:
- Global industry revenue year-over-year growth (2013/2012): 5.5%
- Global industry revenue: US$131 billion
- Revenue per passenger year-over-year growth (2013/2012): 2.2%
- Distribution of global revenues – aeronautical (56.7%), non-aeronautical (38.8%), and non-operating revenue (4.5%)
- Global airport revenue per passenger: US$20.96
- Global aeronautical revenue per passenger: US$11.88
- Global non-aeronautical revenue per passenger: US$8.14
- Total cost per passenger: US$16.96
- Ratio of aircraft-related to passenger-related charges: 38:62
- Distribution of non-aeronautical revenue by key source: retail concessions (28%), car parking (20%) and property and real estate income or rent (18%)
- Labour cost share of operating expenses: 35%
- Capital Expenditure (CAPEX) per passenger: US$5.95
- Global debt-to-EBITDA ratio: 5.45
- Industry net profit margin: 16%
- Global return on invested capital (ROIC): 6.3%
- Personnel employed by airport operators: 454,000
- Personnel working on airport site: 5 million
- Over 80% of the world’s airports have fewer than 1 million passengers per annum
- 69% of airports operate at a net loss after capital costs and taxes
To learn more about the Airport Economics Report and Key Performance Indicators visit the ACI World website.
For a PDF of this ACI media release please click here.
Notes for editors
1. Airports Council International (ACI), the only worldwide association of airports, has 590 member airport authorities, which operate 1,850 airports in 173 countries. ACI’s mission is to promote professional excellence in airport management and operations, and this mandate is carried out through the organization’s multiple training opportunities, as well as the Airport Service Quality customer service benchmarking programme, a wide range of conferences, industry statistical products and best practice publications.
2. The Airport Economics Survey generated responses from 653 airports for the 2013 financial year. Together, these airports handled 4.36 billion passengers or about 70% of worldwide passenger traffic in 2013. Objectives of the sampling were three-fold. The primary objective was to maximize participation and coverage of the world’s top airports in terms of passenger and cargo traffic. In order to introduce analytical variation and rigour to the data set, the participation of airports with lower traffic levels was considered an important factor in developing the sample. Finally, regional representation was regarded as a vital component in presenting a global picture of the industry.
3. Individual airport financial data was submitted in 64 different currency denominations and converted into US dollars (US$) using official exchange rates. The exchange rate was calculated as an annual average based on monthly averages and expressed as local currency units relative to the US$. The financial figures for the previous year (2012) were adjusted by the inflation rate, defined as the change in average consumer prices. Inflation rates and exchange rates were obtained from the International Monetary Fund’s World Economic Outlook Databases and International Financial Statistics.
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