Airports Face Investment Challenges Amid Surging Passenger Traffic

Airports worldwide are grappling with the challenge of securing the necessary investment to expand and modernize their infrastructure as passenger traffic continues to surge, according to the new director general of ACI World.

Speaking at Routes World 2024 in Bahrain, Justin Erbacci said that while passenger traffic is set to exceed 2019 levels this year, airports continue to face financial pressures that could hinder their ability to meet future demand.

“Airports are the ones that are looked at to sustain the growth that's going to happen,” he said. “But while you can have as many planes flying around as you like, if you don't have the airports that can accommodate the passengers and the aircraft, that growth is going to be very difficult.”

Erbacci explained that global air traffic is on track to fully recover from the pandemic by 2024, with 9.5 billion passengers forecasted—a 4% increase over 2019 levels. The Middle East is experiencing even faster growth, with a 10% rise expected.

However, despite this strong recovery, financial issues persist. “While the passenger growth is really increasing, the problem is from a financial perspective. The airports have not recovered financially from the pre-pandemic era,” Erbacci explained.

He said that airports were among the hardest-hit sectors during the pandemic, with traffic declining by up to 95%, yet they were expected to remain operational as critical infrastructure. This financial strain, Erbacci added, is ongoing, with airports now facing the dual pressure of providing enhanced services while keeping costs low to satisfy airline customers.

“It’s very difficult for airports to get the financing they need, because they’re constantly pressured by their airline customers to keep costs down. But at the same time, they have to provide very efficient and customer-friendly facilities,” Erbacci said.

He highlighted the difficult balance airports must strike, especially as many struggle to generate sufficient returns on their investments. “Most of the time, the return is invested back into the facilities, because that's the only way to get the money. But the returns they are getting are much lower than the weighted cost of capital in the market today,” he said.