OPINION
Airport World
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Money matters
Airport World editor , Joe Bates , reflects on airport profitability , changing business models in the US and finding the funds to pay for future airport development .
They may not be quite so loud or as vociferous as they used to be a few years ago , but , in general , airlines don ’ t need much encouragement to complain about high airport charges .
In fact , hardly a month goes by without some airline bleating about overly high fees or warning that they may have to scale back services or axe routes altogether if an airport doesn ’ t reduce its charges .
Indeed , airlines in the UK recently criticised the Civil Aviation Authority after it effectively proposed real-term CUTS to the amount Heathrow can charge them for using its facilities .
To put this into context , the CAA has proposed that airline charges at Heathrow for the period 2014 to 2019 should be capped at the Retail Prices Index ( RPI ) rate of inflation minus 1.3 % – down from current charges of RPI plus 7.5 % for the period 2009 to 2014 .
And there was ‘ good ’ news of sorts for airlines at Gatwick , too , where the CAA proposed a price cap of RPI plus 1 % for the five years to April 2019 from a current average charge of RPI plus 2 %. While at Stansted , where passenger numbers have fallen , the CAA chose to monitor charges rather than impose a cap .
Yet the response from the airlines has been somewhat hysterical , IAG ’ s Willie Walsh claiming that the proposed rise at Heathrow fails to address the hub being “ over-priced , over-rewarded and inefficient ”.
The fact that airport charges account for just over 5 % of airline operating costs somehow seems to have been forgotten .
Maybe they can be forgiven for thinking that airports are a licence to print money because of the headlines airports such as Incheon , Dubai and Heathrow make for their commercial success – the first two make over $ 1.6 billion per annum in duty free sales , while the latter is often referred to as a shopping mall with runways .
However , the economic reality is somewhat different for most other airports , with 70 % of the world ’ s gateways actually losing money .
In this ‘ economics and finance ’ focused issue we crush the myth that airports are money-making machines , and try and find out why so few make a profit .
We also have a special report on US airport ownership and look at airport development in China and the planned privatisation of Greece ’ s regional airports .
I once made an American airport manager so mad at an ACI-NA lunch for daring to suggest that the US should do more to embrace airport privatisation , that he walked away in disgust before his main course arrived ! I ’ d be interested to know his thoughts now that San Juan ’ s Luis Muñoz Marin International Airport has been privatised .
Still on the subject of money , we discover why New Orleans has finally decided to invest in its airport ; turn the spotlight on a global airport investor ; review the benefits of energy efficient terminals and highlight F & B innovation in Australia .
Making money , after all , is important as it often funds crucial new infrastructure and can help keep airline costs down !
Other issues under the microscope in this bumper issue include social media ; airport leadership ; rewards & recognition programmes ; IT innovation and airport sustainability .
I hope you enjoy it !
AW
AIRPORT WORLD / JUNE-JULY 2013
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