THE ROAD TO RECOVERY GOES THROUGH A SHIFT IN AIRPORT BUSINESS MODELS

While it’s possible we are leaving the Covid pandemic behind us, there clearly remains volatility in the sector which is challenging the fundamental business model of the airport. That is one of the conclusions of the second edition of BEUMER Group’s Airport Report, “Airports 2023 Outlook: The Road to Recovery”, that has just been released. The report also offers useful insights into the current state of the global airport industry and what we can expect looking ahead to 2023.

By BEUMER Group

Continuing volatility challenges the AIRPORT business model

We were already starting to see changes to the way airports do business during the pandemic, with a realisation that long term initiatives in digitalisation, automation and sustainability would be key, rather than increasing capacity.

There are two trends that could disrupt the airport business model of the near-future:

  • The impact of sustainability issues on the passenger’s mindset; and
  • The ‘dehubbing’ of the dominant hub and spoke routing model.

The impact of sustainability

Sustainability is no longer a ‘nice to have’ in the global airport business. Alternative, greener forms of transportation may capture air travel market share until aviation fuels become more emission-free, as passengers become more and more sustainability-conscious. It means airports must move fast and don’t have the luxury of waiting five to ten years before developments mature.

Sustainability must also be an integral part of airport business strategies.

It’s easy enough to drive a business case for implementing sustainable measures as efficiencies to reduce carbon emissions will reduce operational costs. Conversely, inaction will impact airport infrastructure, operations and business continuity.

Airports need, therefore, to look at what they consume directly, what they produce and what they purchase.

 Read about how airports can make more sustainable purchases in our report.

Source: “Guidance on Airports’ Contribution to Net Zero Aviation”, ACI Europe, 2022.

The impact of “dehubbing” and the narrowbody lift-off

Heavily-scaled international feeder networks may become impractical and more expensive to operate, while the development of aircraft technology increases the viability of point-to-point, and by extension, ultra long-haul (ULH) operations.

In light of technological disruption and redesigns and the potential competition from more environmentally-friendly forms of travel, airport business models will need to be reassessed.

Shifting business model: Thinking like tech companies

Reliance on ever-dynamic traffic growth can no longer form the basis of business strategies, particularly with the impact of climate breakdown and its potential for slower traffic growth in the future.

Olivier Jankovec, Director General of ACI Europe, puts it this way:

“Transformation, de-risking and resilience are the key words for airports now looking at redefining their business model and securing their future.”

If they are to manage future challenges, airports need to start thinking like tech companies and not infrastructure companies.

This means data and technology have to be the foundation of their business models and strategies. Moreover, technology products that airports develop must also be able to work anywhere because the foundations laid today will change.

Source: International Airport Review 2022

Digital technologies will enable airports to use resources more sustainably. The good news is that airports don’t need to wait for more ground-breaking technologies to start tackling their emissions.

 To gain further insights into how airports can secure their futures, read the full report here.

 

 

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