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    Air Transport Demand Growth

    Air Transport Demand is expected to double over the next 20 Years. That is 3.7% CAGR traffic growth that airports will have to absorb each year. Is this great news for airports? Well – yes and no.

    Certainly, the estimated passenger growth is good news for Airports and air transport service providers in general. More passengers imply growing revenues, increased utilisation and reduced overheads, leading to profit growth for the active players in the markets. For the economy as a whole, the growing activity and profits will attract new entrants to the market, driving competitive benefits and fostering innovation. For consumers, this can mean improved connections closer to home.

    Source: IATA

    However, most airports can expect to reach their optimal capacity very soon, if not already exceeded. A lot of infrastructure is already struggling currently to keep up with air transport demand. “Runways, terminals, security and baggage systems, air traffic control, and a whole raft of other elements need to be expanded to be ready for the growing number of flyers. It cannot be done by the industry alone. Planning for change requires governments, communities and the industry working together in partnership” said de Juniac, Director General and CEO, IATA.

    However, the main challenge of airports is that their infrastructure in general is not scalable. Investments into new terminals, runways and air-traffic management systems take significant time to implement. As an illustration, building a new runway can take from 5 to 10 from the first plans until the implementation of all related procedures, if ever built. Further growth will also increase competition for available resources to expand, such as the necessary technical expertise to implement ATM, airspace design or airport design. There could be investors or government pressure to implement projects quickly, which can lead to errors in execution. Many different stakeholders are involved, government, ANSPs, local authorities and providers.

    The more airports wait to increase their capacity, the greater the pressure on the infrastructure, translating into cancellation and delays. It represents a destruction of value for the end-users – the passengers – as on top of that airfare tends on rise when airport capacity decreases at a time when security and immigration screenings tend to increase.

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