New investment into airport infrastructure is likely to return in 2022 as the air transport industry begins its post-pandemic recovery, according to GlobalData, a leading data and analytics company.
The air transport industry has been among the hardest hit by the Covid-19 pandemic and one of the slowest to recover, with a full recovery not expected until 2024, it stated. International passenger traffic in 2021 is estimated to have reached only half of what it was in 2019, with traffic for 2021 totaling only 4.6 billion, stated GlobalData in its latest report.
Due to the short-term disruptions caused by Covid-19, there has been a severe slowdown in new investment for airport developments, it stated. This is reflected by the global project pipeline, of which, 74 per cent of project value is in the later stages of development. In North America and North-East Asia, this proportion is significantly higher at 84 per cent and 92.5 per cent respectively.
Joel Hanna, Economist at GlobalData, said: “The uncertainty from Covid-19 made it impossible for airport operators to predict future passenger traffic trends.”
“Development plans made before the pandemic became obsolete and governments have generally held off from announcing any new major developments. However, some degree of certainty is expected to return in 2022 as Covid travel restrictions ease for vaccinated passengers and international travel begins to recover,” he stated.
Despite annual spending on airport projects in 2022 estimated to rise by almost 12 per cent from 2021, the lack of new project announcements means that the value of the pipeline could plummet once current projects in execution are completed, noted Hanna.
However, 2022 could be a pivotal year for the air transport industry, with the sector potentially attracting new investment as governments reassess their airport capacity needs, he added.
Currently, domestic travel has rebounded faster than international travel, with passenger traffic expected to reach 78.5 per cent of 2019 levels in 2022. As a result, investment into airport infrastructure is more likely to initially pick up in countries with large domestic air travel markets such as the US and China.
Over the long term, the industry faces challenges regarding sustainability and new technological trends advanced by the pandemic which may curtail overall demand for air travel, limiting the need for major new airport developments, explained Hanna.
Despite this, governments may remain cautious as international travel trends in 2022 may be unreliable due to some lingering hesitancy; some travelers will fear the reintroduction of border restrictions and will likely book flights at the last-minute to reduce cancellation risk, he noted.
According to Hanna, airport infrastructure construction may therefore lack the same demand for air travel in some destinations in the next few years as governments will be reluctant to create new airport capacity based on short-term data.
“However, we are likely to see signs of new investment going into airport infrastructure in 2022, especially in destinations which largely cater to domestic travelers who will not be worried about foreign border policies,” he added.
