Airports transforming

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The new normal - Airlines and airports today are looking at an uncertain future

When it comes to the aviation sector, no one knows for sure where the next sources of long-term economic growth will be, whether it’s in mature or developing markets.

This world of uncertainty isn’t just a one-off experience that the sector must get through before things return to previous trends. It’s the “new normal”—here to stay. Sector players—airports, airlines, investors—will need a strategy for operating within this new set of conditions.

Airlines are overhauling their business models to survive in a newly competitive and dynamic market—which has big implications for airports. And new players are arising in the aviation infrastructure investment space.

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Meanwhile, investors of all types are adjusting their strategies to ink the best deals in the “new normal.” To do that, they’re deepening their understanding of the aviation sector on several fronts—including:

  • What government stakeholders want to get out of an airport
  • How to reduce costs and develop new business in an age of uncertainty and resource constraints
  • How to assess the nuanced risks and opportunities arising in emerging markets’ aviation sectors

The good news is that most airports are still making money, and there are still opportunities out there, despite the worldwide economic downturn.

 

Feature articles

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What is the “new normal” for aviation?

The “new normal” economy has a number of significant challenges for airlines and airports including financial uncertainty and volatility which are contributing to risk..

The opportunities for growth still exist but are shifting to Asia and other emerging markets..

What is the “new normal” for aviation?
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When airport projects fly off course

Airport projects unfortunately may fly off course more often than other types of infrastructure construction because they are more complicated and involve more uncertainty.

Understanding the many ways airport capital project disputes arise can point to effective strategies.

When airport projects fly off course
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Impact management: creating and sustaining value

In the future, addressing environmental, social and economic impact will be key to an airport's competitiveness. Despite only contributing to a small proportion of these emissions, airports are expected to play their part in controlling them.

In this article, there are many examples of airports leading the way in emissions reductions and operational efficiency. Airports will increasingly need to understand what impact climate change itself is likely to have on its own operations.

Impact management: creating value
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Has the trend line shifted?

Airport valuations are being affected by today’s market, characterised by modest growth expectations and significant short-term uncertainties.

Given this climate and the number of value drivers and associated risks affecting an airport’s value, investors need to carefully assess airports’ comparability.

Has the trend line shifted?
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The European airline landscape is changing

European airlines are facing challenges on several fronts—including shrinking operating margins, an ever more difficult yield environment, privatisation and consolidation.

To succeed in this environment, airports will need to become sophisticated businesses. They will have to adopt new management practices, redefine their market position and create unique offerings that will generate real strategic value.

The European airline landscape is changing
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Propensity to fly in emerging economies

Investors in aviation infrastructure should consider propensity to fly (number of air trips per capita) and other unique characteristics of an airport's market.

By understanding trends in the forces affecting propensity to fly and comparing these trends across aviation markets, investors can gain critical insights into where the most promising opportunities may arise in the future.

The rapidly developing markets are seeing the biggest jumps in the number of air passengers but mature markets can benefit from this trend as well.

Propensity to fly in emerging economies
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Airport transactions

Airport transactions are on the rise, presenting a host of new opportunities for investors around the world.

To secure the best deals, investors must understand how the landscape is changing—in terms of who the biggest players are and what they’re after.

They also need to consider where the great opportunities & challenges might arise in the future.

Airport transactions