Airport Diseconomies of Scale​

Airport diseconomies of scale​

The scale of an airport can significantly influence its efficiency, cost structure, and overall profitability.​

While existing research on airport economies of scale largely focuses on smaller facilities, there is limited analysis on whether these benefits persist—or begin to reverse—at higher traffic volumes. Yet observations suggest that very large airports, particularly those exceeding 40 million WLU (Work Load Unit—either 1 passenger or 100kg of air cargo, and can be either departing from or arriving at the airport) annually, often incur disproportionately high costs.​

Development of mega hubs around the world​

In recent years, global aviation has witnessed significant growth, resulting in many large airports. In 2001, only eight airports worldwide handled more than 40 million passengers per annum (mppa); by 2019, that number had risen to 56, with numerous plans underway to develop mega-airports designed for over 100 million WLU annually. However, it remains unclear whether such large-scale infrastructure delivers the expected efficiencies—or whether the additional complexities risk triggering cost escalations instead.​

Hence, new analysis on airport diseconomies of scale is needed, particularly in the context of new airport infrastructure development and post-COVID recovery of the aviation sector.​

During the last two decades, the number of large airports (>40 million passengers per annum, mppa) has increased rapidly. The Asia-Pacific region, especially China, contributed the largest percentage of this growth.​

Airports across Asia-Pacific are undergoing significant expansions, with many targeting capacities of 100 million passengers per annum (mppa) or more to meet rising demand and establish themselves as global hubs.

Major ongoing expansions include Bangkok Suvarnabhumi airport (150 mppa by 2033) and Beijing Daxing airport (100 mppa by 2040). New mega airports like New Manila and Long Thanh are each designed to eventually handle 100 mppa. Similarly, Kuala Lumpur International Airport has long-term plans for up to 140 mppa, while Hong Kong International Airport aims to serve 120 mppa in around 10 years through its Three Runway system.​

The development of large airports can be justified for various reasons:​

We recommend that policy makers, planners and airport developers expand their focus beyond merely addressing capacity to meet demand. Instead, they should evaluate options for delivering a cost-effective travel experience for passengers. These options should consider factors such as surface travel distances to the airport, the time spent navigating the airport from curbside to aircraft, and the operational efficiencies that airlines achieve with shorter taxi distances from runway to gate. Additionally, the availability of slots that align with passenger and airline schedules should be taken into account.​

Undertaking the development of mega-hub airports is not a guaranteed success. Such projects entail significant challenges related to connectivity, operational efficiency, and the complexity of overall management. Ensuring optimal performance and satisfaction for all stakeholders presents considerable difficulties in the context of large-scale airport operations.​

Secondary or mid-sized airports with terminal capacities of 15-40 mppa can provide more sustainable air connectivity growth compared to mega hubs. There are many growth opportunities at secondary or mid-sized airports, with more efficient management of return and expense, and better implication for various relevant stakeholders.

Considerations for policy makers and airport developers​