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Financing future prosperity — airport operators work with governments to incentivize investment in infrastructure

March 22, 2017 Airport No Comments Email Email

Airports Council International (ACI) has released a new Policy Brief on airport ownership, economic regulation and financial performance, marking the beginning of the ACI-World Bank symposium of the ACI 9th Annual Airport Economics & Finance Conference & Exhibition to be held in London, United Kingdom, from 20–22 March 2017.

Resilient infrastructure is the bedrock for the sustainable development of modern economies. In many parts of the world, airport operators face capacity constraints which has resulted in the intensification of bottlenecks, flight delays and safety risks. With ACI’s global medium-term forecast showing 33% growth in passenger volumes from 2015–2020, many national governments face a predicament where the surge in air transport demand is outstripping available airport infrastructure.

Established in 2015, the United Nations Sustainable Development Goals (SDGs) call on the international community to pledge a plan of action based on 17 global targets that aim to ensure prosperity, peace and to eradicate poverty by 2030. SDG 9, “Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation,” is directly pertinent to the airport industry and the economies that it serves around the globe.

Under the umbrella of SDG 9, the ACI Policy Brief aims to provide the state of the industry based on a robust dataset and inventory of the world’s major commercial airports and puts forth several practical policy recommendations to ensure that investment is attracted to the industry. The Brief emphasizes the need for flexibility and consistency in regulatory frameworks that govern airport revenues and capital investments. Specifically, it advocates a move toward well-crafted economic incentives that enables private equity to flow to the airport industry and helps contain the level of risk of such a capital intensive investment.

Key findings and policy recommendations are summarized in the accompanying infographic.

“While ACI does not prescribe a specific ownership model, there is no denying that the government purse is strained in many parts of the world,” said Angela Gittens, Director General, ACI World. The fundamental motive for airport privatizations or public-private partnerships is to finance what States are no longer able or willing to finance. Where infrastructure constraints persist and renewal is required, airport companies, private investors and other consortia provide viable solutions to many of our infrastructure problems. Private sector stakeholders bring commercially-driven management and expertise, which in turn generate value and innovations for airline customers and passengers, but they also expect a return for the risk in investment.

“Airports are wealth generators for other stakeholders in the air transport value chain and their socio-economic impact and multiplier effect extends to the broader economy. ACI seeks to work in partnership with governments, regulators and other aviation stakeholders to ensure that we develop a fertile ground for industry investments to achieve the 2030 SDG,” concluded Gittens.

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