ACI Highlights Severe Pandemic Impact on Airports

The exponential increase in airport costs during the pandemic poses a major barrier to the industry’s recovery, reports Airports Council International (ACI). The organization presented an analysis on the global airport industry, where it reviewed the severe impact of the pandemic.

In its Airport Economics Report 2023, ACI provides an in-depth view of the industry’s financial performance for 2021. The report evaluates Key Performance Indicators (KPIs) for 2023 for over 1,000 airports, which represent 82% of the world's pre-pandemic traffic, explained ACI via a press release. 

“There is no denying that airports are infrastructure intensive businesses, the cost structure is characterized by prominent fixed costs. Under a regulated regime of airport charges that do not adjust to actual market and demand conditions, there should be full awareness of the fact that the regulated formula that protects airlines in good times also requires protecting airports in bad times,” says Luis Felipe de Oliveira, World Director General, ACI. 

This annual report provides a global analysis of revenues by source, costs and related trends across the globe and over time for the airport industry. The report also evaluates the most relevant KPI’s for financial performance, fixed-asset productivity and airport operations. 

The most important financial aspects affecting the industry according to ACI’s report were: the continued financial impact from the COVID-19 pandemic, an increase in the average cost per passenger exceeded average revenue due to the capital-intensive nature of the airport business with many fixed costs, substantial financial pressures and an increase in infrastructure investments. 

ACI explained that airports increased their debt levels in 2021 for numerous financial operations and that the industry's Debt-to-EBITDA ratio was 13:1; which increased exponentially from the pre-pandemic average of 5:1. However, aeronautical revenue represented the largest source of income for airports, with 50% of the total.

In the industry, airports are exploring new sources of revenue beyond the majoritarian aeronautical revenue, with real estate development that seek to reduce traffic risk while adapting to the ever-changing market conditions.  

“Beyond the impact of the pandemic, airports need the support of governments through better global policy frameworks on airport charges. In a changed competitive landscape, light handed models of economic oversight need greater consideration in global policy frameworks on airport charges. Airports must be given greater freedom to operate as businesses. Regulators and the rest of the aviation ecosystem must work together, so airports can continue to play a vital role in the global economy, serving as critical infrastructure for the movement of people and goods,” says de Oliveira.