Business

Global airport capacity crisis amid passenger traffic boom

Global airport capacity crisis amid passenger traffic boom

December 19, 2018 | 10:15 PM
Vehicles drive past aircraft operated by Thai Airways International on the tarmac at Suvarnabhumi Airport in Bangkok (file). The Asia-Pacific region will be the source of more than half the new passengers over the next two decades.
By 2036, 7.8bn people are expected to use air transport. The biggest driver of demand will be the Asia-Pacific region over the next two decades. The region will be the source of more than half the new passengers over the next two decades.Nearly half – some 3.5bn trips – will be to, from or within the Asia-Pacific region. And 1.5bn trips will touch on China.As early as 2022 China will be the largest single aviation market. India is another emerging powerhouse.However, the positive outlook in the industry comes with big challenges. To achieve this growth, large investments must be made in modernising and expanding the quality of aviation infrastructure over a long period.In many key places, infrastructure is not being built fast enough to meet growing demand.Global aviation industry is expected to record phenomenal growth over the next 20 years, with millions of newer passengers taking to the skies, but rising demand may pose significant infrastructure challenges, especially in the Middle East. The Middle East’s aviation market is set to grow strongly over the next 20 years scaling up to nearly 520mn passengers by 2036, the International Air Transport Association has said in a report. This means, the region led by the GCC, will maintain average compound annual growth rate (CAGR) of 5%.Globally, IATA expects 7.8bn passengers to travel in 2036, a near doubling of the 4bn air travellers expected to fly this year. The prediction is based on a 3.6% average CAGR.While the projected growth in the global aviation industry is obviously good for economies worldwide, the fact remains that a crisis may occur if adequate infrastructure investments are not made urgently.All the optimism supporting strong aircraft orders will mean nothing if we don’t have the capability to manage traffic in the air and at airports.Air traffic management is certainly struggling to cope with growth, while high costs at many privatised airports are burdening the industry.A case in point is China and India, two fastest-growing markets in the world. China will see 921mn new passengers for a total of 1.5bn and India 337mn new passengers for a total of 478mn by 2036. Already, Chinese air traffic management is struggling to cope with growth, while high costs at India’s privatised airports are burdening the industry.In many parts of the world, airports face a different set of growth issues. Unlike airlines, which can expand capacity quite quickly by ordering a few more planes and finding new runway slots to operate, airport capacity expansion is lumpier, requiring longer lead times as well as much more intensive stakeholder discussion and dialogue.In developing and emerging markets, airport expansion appears easier – and is often supported strongly by the regulating authorities as a means of providing strategic support to economic growth in a region or nation. But that carries a different risk – of over-ambitious expansion – akin to the problems that the airline industry has experienced by over-investing in capacity in the past. Also, alongside airports, airspace capacity needs to be developed. In Europe and North America, there is a high degree of capability in airspace management that can be deployed in Asia, the Middle East, and Africa as these regions start to experience airspace congestion around major cities and airport hubs.According to Alexandre de Juniac, International Air Transport Association director general, some 34mn jobs and $700bn of economic activity supported by aviation across the Asia-Pacific region are expected to more than double in the next 20 years.Maximising the potential benefits of aviation growth will also depend on how the current levels of trade liberalisation and visa facilitation are being maintained.Indeed, finding sufficient capacity to meet the air travel growth is a pressing issue. In order to achieve better capacity index in terms of overall capacity crisis, airport infrastructure needs a more complex approach. Airport privatisation, which was previously considered a possible solution, has its pitfalls, already visible by airlines and passengers. Instead of the more expensive infrastructure model offered by privatised airports, there is a challenge to find more efficient and competitive models. When developing a functional and cost-effective airport infrastructure, it seems fair to imply users’ demand and choose a customer focused approach, experts say. In developing and emerging markets, airport expansion appears easier – and is often supported strongly by the regulating authorities as a means of providing strategic support to economic growth in a region or nation. But that carries a different risk – of over-ambitious expansion – akin to the problems that the airline industry has experienced by over-investing in capacity in the past. Airlines and their passengers and cargo need safe, functional and affordable airport infrastructure for their operations to thrive.Efficient and economical air transport contributes directly to a community’s prosperity. Poorly thought-out airport privatisations put this at risk. Therefore, the balancing role of effective and strong economic regulation is essential.Investments must focus on the improvement of passenger and freight capacity, generating gains such as reduction in travel time and improvement of service predictability and reliability, and maintaining public confidence that aviation is safe, secure, and environmentally responsible.Also, alongside airports, airspace capacity needs to be developed. The global aviation industry’s problem is clear. Infrastructure is not being built fast enough. And that has to change – sooner the better!Pratap John is Business Editor and Chief Business Reporter at Gulf Times.
December 19, 2018 | 10:15 PM