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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