Airports Face Investment Challenges Amid Traffic Surge

Airports worldwide are grappling with the pressing need for investment to expand and modernize their infrastructure as passenger traffic continues to surge. This insight comes from Justin Erbacci, the new Director General of Airports Council International (ACI) World, who spoke at Routes World 2024 in Bahrain.

Erbacci noted that passenger traffic is projected to exceed 2019 levels this year, yet many airports face financial pressures that could hinder their ability to meet this rising demand. “Airports are the ones that are looked at to sustain the growth that’s going to happen,” he stated. “But while you can have as many planes flying around as you like, if you don’t have the airports that can accommodate the passengers and the aircraft, that growth is going to be very difficult.”

According to Erbacci, global air traffic is on track to fully recover from the pandemic by 2024, with an estimated 9.5 billion passengers forecasted—a 4% increase over 2019 levels. The Middle East is expected to witness even faster growth, with a 10% rise in passenger traffic.

Despite this optimistic recovery, Erbacci expressed concerns about the ongoing financial struggles of airports. “While the passenger growth is really increasing, the problem is from a financial perspective. The airports have not recovered financially from the pre-pandemic era,” he explained.

Airports were among the sectors hardest hit during the pandemic, experiencing traffic declines of up to 95%. Nonetheless, they were expected to remain operational as critical infrastructure. This financial strain is still prevalent, with airports now facing the challenge of providing enhanced services while keeping costs low to satisfy airline customers.

“It’s very difficult for airports to get the financing they need because they’re constantly pressured by their airline customers to keep costs down,” Erbacci noted. “But at the same time, they have to provide very efficient and customer-friendly facilities.”

The balance that airports must strike is complex, especially as many struggle to generate sufficient returns on their investments. “Most of the time, the return is invested back into the facilities because that’s the only way to get the money,” he said. “But the returns they are getting are much lower than the weighted cost of capital in the market today.”

Erbacci’s comments underscore the urgent need for airports to secure funding for modernization and expansion as they prepare for the anticipated increase in passenger traffic. The aviation industry must collectively address these financial challenges to ensure that airports can accommodate future growth and provide exceptional travel experiences.

As the global travel landscape evolves, airports must find innovative financing solutions and strategic partnerships to enhance their infrastructure. With a strong focus on sustainability and customer satisfaction, airports can better position themselves to meet the demands of travelers and airlines alike.

In conclusion, the road ahead for airports is fraught with challenges, but with strategic investments and a commitment to modernizing facilities, they can successfully navigate the evolving landscape of the aviation industry.

Related news: https://airguide.info/category/air-travel-business/airport-business/