Global Airport Industry
The worldwide market for airport services exceeded $102 billion in 2010, having recorded 3% annual growth for the four preceding years, reports MarketLine. Market volume saw an almost 2% increase over the same four-year period. Entry and exit costs are high in this market, and it is nationally concentrated with a few large companies dominating.
The US leads the global airport industry, with the highest number of airports, reports Xerfi. Most of the world’s airports are located within the EU, North America and Asia.
The strongest performance in terms of passenger traffic growth is being witnessed in developing countries. Airports or airport operating outfits are public or semi-public for the most part, though the industry continues to witness an increasing degree of privatization, with greater emphasis on business.
Airport Retail
- Global airport retailing recorded a sharp fall in sales in 2009, but has witnessed recovery more recently. Growth has been fuelled mainly by passenger volumes, rising steeply in developing markets, without a spend-per-passenger increase. Research from Verdict predicts the global airport retailing market will witness almost 45% growth in the five-year period ending 2015. Expansion will mainly come from emerging countries, with Asia Pacific in particular set to exceed 76% growth. The Middle East and Africa are also expected to record around 40% growth.
- Fashion and accessories together represent the leading product segment, accounting for around a quarter of global airport sales. This product category has witnessed strong growth in recent years, fuelled by demand for luxury brands in Asia Pacific, where 46% of airport fashion and beauty sales come from luxury brand sales. An advantage for retailers is the fact that passengers are obliged to go through sales points on their way to their departure gate: consumers often have free time to spend before their flights, leading to browsing. Consumers with less time can still browse due to flight information screens placed in these shops, informing them of any flight delays and keeping them up to date on how much time remains before their flight is called.
- Less than half of EU air passengers plan to make duty-free airport retail store purchases over a six-month period, reports Canadean. Close to 55% of passengers made impulse buys over the same period. The three leading product segments occupying airport retail space are food, beverages and tobacco; followed by perfumes, cosmetics and personal care; and lastly apparel, accessories and luxury goods. Per-visit average spending on food and beverages is just less than $15. Customers spend close to 25 minutes in duty-free airport retail outlets on average, whereas the average time spent at duty paid outlets is less than 20 minutes.
Regional Market Share
- India’s government has been providing strong support for private participants, fuelling expansion and improvisation in the country’s airport infrastructure, reports RNCOS. Increased passenger travel and improving economic activity have created a greater need for airport infrastructure. Government reforms are favoring investment in India’s airport infrastructure segment. The long-term outlook for private players and the country’s airport infrastructure category is positive, with investment set to rise, and the Greenfield projects especially expected to witness increased investment. International cargo traffic is set to witness 10% yearly growth through 2015. Obstacles to growth in India’s airport sector include insufficient parking, and single runways and cargo handling, along with inadequate customs clearance capabilities, together all leading to airport delays. The Airports Authority of India is therefore focusing its efforts on bringing cargo handling facilities up to date to cut down on congestion. Private interest in the sector is strong, with the government’s 11th Plan projections pointing to almost $5 billion of private investment and accounting for almost 65% of overall airport infrastructure investment.
- China’s aviation sector has bounced back from the global recession quicker than other countries, according to Research In China. China Southern Airlines, China Eastern Airlines and Air China International were the three top-ranking airlines in terms of fleet scale and average monthly passenger traffic. China Southern Airlines dominates with the highest number of aircrafts and top yearly passenger traffic in the country’s aviation sector. China’s passenger traffic figures were the highest in Asia, and ranked third in the world in 2010.
Market Outlook
Over the coming years, the global airport industry will continue to prioritize aviation security worldwide. According to research from Global Industry Analysts, growth in the global aviation security sector is strong, fuelled by rising security concerns and increasing air traffic. New airports under construction in the EU and Asia-Pacific will boost demand for aviation security. Technology will continue playing a vital role, with aviation security equipment becoming more effective, lighter, smaller and less costly.
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