Table of Contents
•The lack of Infrastructure and the non-availability of funding for infrastructure are the x main challenges facing airport development in underdeveloped economies.
•Government regulations and project implementation delays are the x main challenges in developing economies.
•In high traffic airports such as the Dubai International Airport, managing limited resources such as runways and airspace is the key challenge.
•Low growth in the air cargo market is impeding growth of air cargo revenue for airport operators.
•The lack of technology in air cargo, accompanied by lower prices in sea cargo, is driving customers away from shipping goods through flights.
•Non-aeronautical sources of revenue are becoming a significant revenue stream for airports. Airports such as the Shanghai International Airport have witnessed revenue growth rates far greater than growth rates from aeronautical sources of revenue.
•To revive and promote economic growth, an aerotropolis or an airport city is becoming a centrepiece strategy in certain regions, which is expected to drive significantly non-aeronautical sources of revenue for airports in such cities. The Amsterdam Airport Schiphol adds € billion annually to the country’s gross domestic product (GDP).
Research Objective and Scope
•Analyze the financials of public companies in the global airport industry.
•Rank companies based on their financial and risk management.
•Identify key trends and challenges that can impact the performance of industry participants over the next 12 months in 2015.
Revenue Streams for Airports
Non-aeronautical revenue is becoming a critical component of airport revenue. Leveraging the vast real estate associated with them, airports are being presented as a place where passengers can spend more time and money through various duty free shops and services.
Aeronautical revenue is earned by way of incoming and outgoing passenger traffic and flights, including aircraft landing and take-off fees and passenger service fees. Passenger service fees cover costs for security and facilities provided at the airport.
Another component of aeronautical revenue is air cargo handling. Many airports act as cargo hubs, and revenue from cargo services are essential to their profitability.
Challenge Areas for Airports
Successful airports require infrastructure that can handle incoming and outgoing flights. Airports need effective infrastructure to ensure security and to encourage passengers to spend more time within the airports, which would translate to revenue. Airports often face difficulty in raising funds for these purposes and face challenges in maintaining the same.
The airport industry is heavily regulated, with many governments owning the construction and maintenance of airports and fee structure, which, in many cases, acts to the detriment of the airports because of government policy interference and inefficiencies.
Airports require skilled staff to manage ground services for both passengers and cargo services. The lack of skilled staffers, combined with high attrition rates, makes it difficult for airports to offer specialised services such as handling and managing cargo that needs to be in a temperature controlled environment.
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