ACI World reveals need for trillions in capital expenditure for recovery and long term growth

New Airports Council International (ACI) World forecasts for the global airport sector show that approximately US$2.4 trillion in airport capital investments will be needed to address the long-term trend in passenger demand to 2040.

The Global Outlook of Airport Capital Expenditure – Meeting Sustainable Development Goals and Future Air Travel Demand, published on Wednesday, shows that significant investment in new greenfield airports, as well as significant investment to expand and maintain existing airport infra-structure, is required. The study was supported by Hamad International Airport and developed in collaboration with Oxford Economics.

The report estimates that capital expenditure between the pre-COVID-19 baseline year of 2019 and the depth of the global COVID-19 lockdown (2020) declined 33%, or about $28 billion.

ACI World expects partial recovery in capital investment to about 14% (approximately $12 billion) below 2019 baseline in 2021. The report believes that as air transport demand recovers to pre-pandemic levels, passenger demand will put increased pressure on airports’ infrastructure and failure to invest to address capacity needs will have real socio-economic consequences.

If longer term capacity constraints are not addressed through capital investment, ACI World estimates a reduction of up to 5.1 billion passengers globally by 2040.

For every million passengers airports cannot accommodate due to airport capacity constraints in 2040, 10,500 fewer jobs and $346 million less in Gross Domestic Product would result.

“Airport infrastructure is key to the continued development of air transport which supports millions of jobs and provides social and economic development for the global communities we serve,” ACI World Director General Luis Felipe de Oliveira said.
“ACI World’s CAPEX study shows the airport industry’s current financial shortfall poses significant challenges to the modernizing of infrastructure to improve sustainability and resilience which will be required if passenger demand into the future is to be met.

“In normal times, addressing the growth of passenger demand in the face of global airport capacity constraints already poses a significant challenge, but the pandemic has dramatically reduced airport revenues, adding even greater challenges to meeting long-term capacity needs.”

Greenfield airports critical to achieving sustainability goals

ACI World recently published its long term carbon goal whereby the world’s airports are committed to net zero carbon emissions by 2050. To realize this, additional green capital financing will be needed and ACI World believes that, to fully realize positive economic, social, and environ-mental outcomes, innovative approaches, appropriate incentives, and flexibility in organizing and securing financing, such as green bonds or public-private partnerships, are required.

Regional breakdown

Reflecting the region’s rapid passenger growth and subsequent demand to develop new greenfield airports, ACI World forecasts that Asia-Pacific will need about $1.3 trillion to modernize and expand existing airport infrastructure. The Middle East is projected to need about $151 billion.

Representing 18% of the 2021–2040 global total, Europe will need $427 billion in capital investments. More than half of this investment is expected in terminals to maintain and retrofit the region’s infrastructure.

North America will need $400 billion in investment–representing about 17% of the global total. Projections suggest that new green-field airports are very minimal or unlikely, as airports have strong geographic coverage in the region.

Latin America-Caribbean will need an investment of about $94 billion of which an estimated $41 billion will be for new green-field development. Africa’s needs exceed $32 billion, with 40% of the investment needed for new greenfield airport development.