Editorial: Back to the Challenges of Growth

By Olivier Jankovec, Director General, ACI EUROPE

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As things stand, 2017 is on course to set yet another record for passenger traffic in Europe, thankfully defying some significant geopolitical risks.

This year’s growth dynamic comes on top of Europe’s airports having already welcomed an additional 300 million passengers between 2013 and 2016. We passed the 2 billion passengers mark last year – when EU airports alone contributed to more than 20% of global air traffic growth. This is as much as Chinese airports, and much more than US airports (which only accounted for about 12%).

These figures are impressive. Looking ahead, they are challenging the assumption that the European aviation market is reaching maturity. The Low Cost revolution, more efficient aircraft technology and new dynamics in the travel & leisure markets – mainly driven by digitalisation, the rise of ultra-mobile millennials and an ever expanding global middle class – are all pointing towards the potential for more sustained traffic growth at Europe’s airports.

Of course, such growth will not be linear, for instability is set to remain a defining feature of the years to come – both politically and economically. But one thing looks now certain: it will come with unrelenting capacity pressures upon airports. These pressures are likely to expand from terminals to runways and other airside facilities. Indeed, while airlines have so far accommodated the rise in demand predominantly through a combination of higher load factors, more compact seating arrangements and the use of larger aircraft, we will soon reach the limits of that. In particular, with load factors already at a record high, we can expect aircraft movements to increase at a faster pace.

Even before the current traffic surge – Eurocontrol was already predicting that by 2035, 12% of demand for air transport would not be accommodated in Europe due to a lack of airport capacity. It will be interesting to see what its new & updated forecast will tell us, when it is released next year. But it seems that the airport capacity crunch is more likely to get worse before it gets better.

An increasing number of airports are already feeling the heat. Dynamic growth is (very) nice, but it also brings challenges in terms of maintaining quality levels and operational efficiency. Unfortunately, it also tends to pit airports and airlines against each other. It is not really surprising that the feedback we get from many of our members these days is that they are increasingly facing airline opposition to their expansion plans.

Of course, it is about the money. Expanding capacity means investing, and investing means increasing revenues – which in turn involves higher user charges. But it is also about airline competition. Blocking capacity developments by opposing airport investment is a very effective way for incumbent airlines to prevent new entrants, reinforce their market dominance and extract higher yields. This is not good for connectivity – and it is not good for consumers. SEO Amsterdam Economics & Cranfield University have estimated that passengers in Europe are already paying €2.1 billion every year in higher fares due to capacity constraints at airports. They see that figure rising to €6.3 billion by 2035 as a result of airport congestion.

All this shows that managing growth is multifaceted and that wrong decisions can have far-reaching implications. What matters is to keep the focus on outcomes that truly benefit end-users – the businesses and citizens that have come to rely on ever expanding air connectivity.

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