Airport biz remains grounded, could take off only from 2024

According to Airports Council International (ACI), airports generated revenues of $172.2 billion in 2017, up 6.2 per cent year-on-year. The airport industry has steadily expanded in recent years, driven by strong growth in passenger traffic. In 2019, total trips exceeded 9 billion - up 3.4 per cent year-on-year.

The sudden drop in air traffic has led to almost complete paralysis of both aeronautical and non-aeronautical revenues. As airlines cut capacity, the aeronautical revenues airports receive from airlines, such as landing charges for aircraft and security charges, fall. As people stop flying, non-aeronautical revenue, derived from airports' parking facilities, restaurants, or duty-free, also plummets. According to ACI, total airport revenues fell by 35 per cent worldwide in Q1 2020 (equivalent to $14 billion) and by 90 per cent in Q2 2020 (equivalent to $39 billion).

Projected estimates for 2020, as a whole, paint an even grimmer picture, with a 50 per cent drop in total passenger traffic (to 4.6 billion) and a drop of nearly 57 per cent in airport revenues (to $97.4 billion), compared to pre-Covid-19 forecasts

The impact of the Covid-19 crisis affected airport revenues severely in 2021. It is now estimated that, globally, airports will lose more than $111 billion in revenues this year, $3 billion more than we projected in our previous assessment of July 2021. The crisis is expected to cut by more than half (57.2 per cent) airport revenue expectations for 2021 compared to the projected baseline (the pre-Covid-19 revenue forecast). Compared to 2019, airport revenues will be reduced by 54.1 per cent.

The Middle East and Europe will remain the regions most affected in relative terms, respectively seeing 69.3 per cent and 61.5 per cent declines in 2021 compared to the projected baseline. Europe, the most impacted region in absolute terms, is expected to lose more than $39 billion in revenues by year-end 2021 compared to the projected baseline.

North America and Latin America-Caribbean are expected to recover quicker than the other regions and in 2021 will reach more than half of their projected baseline revenues for the year. These regions are forecast respectively to see 49.2 per cent and 46.7 per cent decreases in 2021 compared to the projected baseline.

Asia-Pacific's estimated revenues for 2021 are reduced in this bulletin compared to the bulletin we published in July. This is as a result of setbacks in some key markets - such as China's domestic passenger market - caused by new travel restrictions arising later in the year. Asia-Pacific's revenues are expected to be down 55.9 per cent - that is, $34.5 billion - in 2021 compared to the projected baseline.

Projections in 2022

Before the Covid-19 outbreak, the airport industry was expected to generate more than $200 billion in revenues in 2022. However, the impacts of the Covid-19 crisis on airport revenues will continue in 2022, reducing them by an additional $78.6 billion, or 39 per cent, compared to the projected baseline. As is expected in 2021, each quarter of 2022 will see an improvement over the previous one, in relative terms.

All regions except the Middle East are expected to reach more than half of their projected baseline revenues for 2022. The Middle East will remain the most impacted region, with its revenues for 2022 falling 51.2 per cent short of the projected baseline. In absolute terms, Asia-Pacific and Europe will record the largest losses among the regions in 2022, ceding $26.7 billion and $24.3 billion respectively - despite a significant recovery by Europe during the year.

North America and Latin America-Caribbean are expected to continue to perform better than any other region in 2022. They are forecast respectively to see 35.5 per cent and 30.4 per cent shortfalls compared to the projected baseline.

Under the current projection and taking into account the slower than expected fourth quarter of 2021, global passenger traffic is expected to recover to 2019 levels in early 2024.