As aviation resumes its pre-pandemic levels, it appears that airports are being left behind, especially in terms of profitability.
Although airlines have seen years of their finest financial performance, it appears that airports are not receiving their fair part of the pie. As traffic returns to pre-pandemic levels, high fares are contributing to airlines’ above-average yields, but airports are still losing money.
The fourth quarter of 2022’s airport industry outlook was published last week by the Airports Council International (ACI) Asia-Pacific (Q4). An examination of airfare trends and their effects on the financial stability of the region’s airports is included in the research, which covers airport and airline activities in Asia-Pacific and the Middle East.
Airlines: Are they doing too well?
The conclusion from the report is that airlines are thriving while airports are left in their wake, rather than presenting an industry where all sectors are sharing in the rebound. According to the ACI research, a key component of that equation is the region’s expensive airfares.
Airfares in Asia-Pacific and the Middle East (APAC-ME) were higher than the global average in 2022 and had increased by 35% (in real terms) or 53% (in nominal terms) from 2019, however they were beginning to decline as the year came to a conclusion. It makes sense to assume that airports are contributing to the rebound as air travel resumes and passengers start to return from their vacations. Director general of ACI Asia-Pacific Stefano Baronci, however, stated that despite the consistent increase of domestic traffic and the gradual development of foreign traffic,
“…the financial well-being of airport operators remained precarious, with ten straight quarters of negative net profit margin and EBITDA.”
The average fare increase of 53% in 2022, he continued, demonstrates a “fundamental imbalance in the financial health of the business” despite airports’ significant efforts to freeze or reduce fees. High airfares, according to Baronci, “threaten the sector’s full recovery in 2023.”
