Airports Eyes Recovery and Growth, Despite Economic Hurdles: ACI Report

Thursday, February 15, 2024

The most recent report from the Airports Council International for Asia-Pacific and the Middle East (ACI APAC & MID) indicates an encouraging upward trend in the resurgence of airport traffic and financial health. Despite this, broader economic variables continue to challenge the sector’s full recovery.

This report, produced in collaboration with Mott MacDonald, shows that seat capacity in the second half of 2023 is nearly at par with the figures from the latter half of 2019, down by a mere 3%. The capacity for domestic flights during this period saw a 3% increase from 2019, whereas international capacity is still trailing by 14%.

The year 2023 started on a high note, especially with China reopening its borders, leading to a significant recovery in traffic across the Asia-Pacific region to nearly 90% of pre-COVID levels. The Middle East, in particular, experienced a growth of about 4% over the 2019 metrics.

Looking ahead to 2024, the forecast is optimistic, anticipating a complete recovery in the Asia-Pacific area and the Middle East projecting to surpass previous records with over 450 million passengers. Despite this positive outlook, there’s a cautious tone due to geopolitical tensions in Eastern Europe and the Middle East, including the ongoing Red Sea crisis, which impacts international shipping routes and could influence air cargo rates and demand favorably for the airports in Asia, the Middle East, and Europe.

Cargo load factors (CLFs) stood at 43% in the third quarter of 2023, on par with 2019’s figures but less than the peak in early 2021. The Asia-Pacific region outperformed the global average, with CLFs increasing from 44% to 46% from the second to the third quarter of 2023, although still not reaching the highs of 2021. The Middle East saw a slight decline in CLFs, falling below the global average.

Analysing the trends, Mr. Stefano Baronci, Director General of ACI Asia-Pacific & Middle East, said, “As reported by the International Monetary Fund, overall, Asia is on track to deliver two-thirds of global growth in 2024 and remains the key engine of economic growth in the World. This is reflected in the consistent positive trends in traffic and finances with airports in our region, which in 2024 is expected to reach a market share of almost 40% of the total passenger and cargo traffic at global level. From 2024 onwards, we hope that the expression “pre-COVID recovery” with reference to Asia will soon become obsolete in our vocabulary. While still navigating macroeconomic and geopolitical risks, we remain optimistic about growth prospects in the region, with our estimates suggesting Asia-Pacific to record 3% growth and the Middle East to consolidate its upward trajectory with a growth of 14% over 2019 levels.”

Airport financials indicate continued growth in traffic during the third quarter of 2023, with APAC and ME airports maintaining profitability. The EBITDA margins rose to 30% in this quarter, up from 28% in the previous quarter, although net profit margins saw a slight decrease. Revenue from airports increased by 42% from the third quarter of 2022, yet it was still 3% lower than the same quarter in 2019. Aeronautical revenue, which constituted 53% of the total revenue in the third quarter of 2023, was the lowest since 2019. Total operating expenses saw an increase for the first time since the third quarter of 2022, driven by the resurgence in traffic and consequent rises in labor and energy costs.

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