Airport Airport Key Performance Indicators Reveal Industry Financial Performance Amidst Capacity Challenges

Global airport revenue has grown in tandem with passenger traffic

At the 11th Annual Airport Economics & Finance Conference & Exhibition in London, Airports Council International (ACI) World has published its annual Airport Key Performance Indicators (KPIs) which reflect developments in air transport demand.

Based on comprehensive data from the 2017 financial year, analyses of the KPIs reveal global airport revenues grew 6.2%, lagging the 7.5% growth in passenger traffic, to reach US$172.2 billion. This revenue is comprised of:

  • aeronautical revenue: 55.8%
  • non-aeronautical revenue: 39.9%
  • non-operating revenue: 4.3%.

At a global level, total cost to the airport per passenger was found to be US$13.69 which exceeded significantly global aeronautical revenues per passenger (US$9.95). This illustrates the importance of non-aeronautical revenues – currently standing at US$7.08 per passenger – for airports’ financial sustainability.

ACI World has stated that, beyond physical capacity constraints, disproportionate regulatory regimes that hinder flexibility in setting the right level of charges represent an additional impediment to airport development and investment in infrastructure.

Industry return on invested capital (ROIC) stands at 7.4%. Eighty per cent of airports in the world are small – handling fewer than a million passengers per annum and 94% of these airports are loss-making.

“Global passenger traffic has reached record levels as airports continued to make a crucial contribution to furthering economic development and global connectivity,” ACI World Director General Angela Gittens said.

“While strong competitive forces continue to drive innovation and improvements in efficiency and service for passengers, airports face the challenges of meeting the continuing global growth in demand for air services. The airport capacity crunch is no longer a figure of speech. The question of financing new infrastructure is becoming the most fundamental one for the industry.

“The disparity between large and small airports, however, is a serious challenge when it comes to questions directly impacted by the level of traffic – profitability, investor attractiveness and overall competitiveness in attracting resources. The challenge for our industry remains that 80% of airports in the world are small, with high traffic volumes concentrated in only a handful of locations.

“This means there is wide disparity when it comes to profitability. Although the airport industry is profitable on the aggregate level, two thirds of airports are in the red with 94% of all loss-making airports handling traffic volumes below one million passengers per annum. Thus, developing the necessary strategy to enhance traffic growth is fundamental in generating a positive economic return. While smaller airports have spare capacity and can easily accommodate additional traffic, most bigger airports are significantly constrained and require immediate expansion contingent upon appropriate financing mechanisms.”

On the aeronautical side of the business, 55% of every dollar was generated from passenger-related charges as compared to other aeronautical sources of income such as the classical aircraft-related revenues.