Business World

Saturday 23 August 2014

Bigger airports soaring, but regionals land in red

John Mulligan

Published 18/06/2014 | 02:30

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Dublin Airport
Dublin Airport

Nearly half of Europe's airports are making a loss even though combined profits at the businesses rose 13.6pc to €2.5bn in 2012, according to Airport Councils International (ACI), which is holding its annual congress in Frankfurt.

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ACI Europe said that 2013 saw a progressive recovery of air travel, with 1.66bn passengers using airports in the region.

Since the beginning of 2014, passenger traffic at European airports has risen 5.5pc and freight traffic is 4.9pc higher.

"Significantly, the performance gap between EU airports and non-EU airports is now at its lowest since the 2008/2009 financial crisis, with most airports in Ireland, Greece, Portugal, Spain and Cyprus enjoying a rebound," the ACI said.

"As with any competitive industry, this is not a win-win for all," said ACI Europe general director Oliver Jankovec.

"Several large airports have enjoyed a traffic boost this spring as low cost airlines are now clearly moving up market. However, these gains have often come at the expense of other secondary or regional airports."

It pointed out that 44pc of Europe's airports are loss-making and that the industry's average rate of return on invested capital (ROIC) is just 5pc, which it said is well below the average 5.9pc ROIC for the global airport industry. Airports in the eurozone even underperform the European average, with an ROIC of just 3.9pc.

Dublin Airport Authority chief executive Kevin Toland recently pointed out that the company was "barely profitable". Last year, the DAA's revenue fell 6pc to €501m, while the core business profit slipped 7pc to €26m as it sold interests in Russia and Ukraine. Cork Airport, which is also part of the DAA, is still loss-making.

ACI Europe forecast full-year passenger growth of 3.5pc for 2014 and freight growth of 3pc.

"The pie is getting both smaller and thicker," added Mr Jankovec. "We have gone from 1,141 route openings in Europe in 2010 to just 251 last year.

"Charges paid by airlines only represent 14pc of total airport revenues, down from 21pc back in 2008," he said. "Even when factoring in charges paid by passengers, the airport industry is left with a staggering €4bn in unrecovered operating costs."

Irish Independent

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