The overall fall in passenger traffic at airports may have slowed last year, but global economic gloom, the Iraq War and the SARS virus have postponed hopes for a recovery
Looking at the stark traffic numbers of the past year, airports have never had it so bad. Prior to the events of 2001, no matter what the fortunes of their airline customers, airports, with their increasingly diversified sources of revenue, had been able to cushion themselves somewhat from downturns in the business cycle.
In addition, many airports were successful in attracting low-cost carriers and cargo operators to keep passenger and freight numbers growing even during periods when the global economy was in recession. Like most other aspects of the airline business, this has all changed.
Preliminary figures from the Airports Council International (ACI) suggest that the decline in passenger traffic was stemmed in 2002, declining by a modest 0.4%, although the world average masks heavy falls in North America and Europe. Taken on top of a 2.6%traffic decline in 2001, that left the world's airports at the end of last year with passenger numbers some 3% below their peak in 2000.
North America is by far the worst affected having a compound decline of nearly 9% over the past two years, with Europe not too far behind having fallen by 6.5%. Only the airports of Asia-Pacific and the Middle East have actually showed healthy gains since 2000.
Although traveller behaviour is difficult to measure, Paul Behnke, ACI director economics and security, detects a significant shift over the past couple of years with a "modal diversion" to road and rail service. This has been most significant on city pairs where the overground trip is under three or four hours.
Nowhere is the fall more apparent than at Brussels National. Through a combination of the failure of Belgian flag carrier Sabena and a rising challenge from neighbouring Charleroi - where low-fare carrier Ryanair is expanding fast - the airport has lost a third of its traffic since 2000. It is hardly alone in seeing double-digit falls. No fewer than 28 of the top 100 airports in this year's ranking ended 2002 with a double-digit decline in passenger numbers compared with the levels two years ago.
Overall, European airports saw traffic stabilise in 2002, while those in the Asia-Pacific and Middle East reached the giddy heights of 5% annual growth. North America continued to underperform, falling a further 2.7%. Only nine of the 40 North American airports in the ranking registered any rise last year. By contrast all but six of the 24 Asia-Pacific airports showed robust growth.
It will take another year to see what effect the Severe Acute Respiratory Syndrome (SARS) virus has on 2003 traffic in Asia-Pacific, especially the Chinese hubs of Beijing, Guangzhou and Shanghai, which had seen spectacular climbs since 2000. Shanghai Pudong, which opened in 1999, has almost doubled its traffic since 2000, taking over international flights from congested Hongqiao last year. Another transfer of operations took place in South Korea, with Seoul's Incheon taking up the international services of Gimpo since opening in March 2001. Gimpo remains open for domestic services.
In Japan, congested Narita finally brought its long-awaited second runway into service in April 2002, helping it boost its traffic by 14% last year. Osaka Kansai is going in the opposite direction, despite offering discounts on landing fees, and is finding it tough to win back the traffic that it has lost since 2001.
Asia-Pacific airports dominated the list of growth leaders in 2002, but many will be nervous of their 2003 prospects while hoping that the spread of SARS is brought rapidly under control. OAG data showed flights from Hong Kong down by some 36%in May, while Singapore fell 29%and Taipei 12%. All three have reacted to the sharp cuts in capacity with moves to support their carriers including landing fee cuts and payment deferrals.
SARS blow
The advent of SARS is another heavy blow to the already suffering airports of the US West Coast. San Francisco, Los Angeles and San Jose have all seen traffic dip by at least 15% since 2000. For Los Angeles, its 2002 passenger total is the lowest since 1996.
In 2001, the top 10 airports showing the greatest traffic falls were exclusively North American. A year later, only Kansas has joined them, mainly due to the shutdown of local hub carrier Vanguard Airlines in mid-2002.
Despite being the only airport to open a new runway in the USA during 2002, Cleveland has seen a dramatic fall in traffic since it peaked at over 13 million passengers in 2000. Much of the decline is because of the downsizing of Continental Airlines, which represents over half of the traffic at Cleveland.
On the positive side, Oakland, Fort Lauderdale and Chicago's Midway were among the few US airports to manage reasonable growth since 2000. Oakland, particularly, has benefited from the continuing growth of Southwest Airlines.
Traffic slump
In Europe, Zurich shares the unenviable distinction with Brussels of having lost its hub carrier and suffering a consequent dive in traffic. At least Swiss, the successor to failed Swissair, is still operating, albeit in a scaled-down and still-troubled form. Other airports that have suffered most from capacity cuts by home carriers are Istanbul, Milan Malpensa and Athens.
However, the most dynamic growth has come below the big league, with regional and secondary airports showing massive traffic increases over the past couple of years thanks to the introduction of low-cost service. London Stansted's phenomenal growth rates saw it edge into the bottom of the Top 100 ranking in 2000 and soar to 64 in 2002, with the rise almost entirely due to the low-cost boom there led by Ryanair/buzz and easyJet/go. Similarly, the sharp 38% rise over recent years at Turkey's Antalya airport shows the increasing popularity of this busy holiday destination.
Elsewhere, the aggressive expansion of home carrier Emirates has helped Dubai shoot up the ranking. To meet an anticipated demand of 30 million passengers by 2010, the airport embarked on a $4 billion expansion last year.
Many airports were hoping this year would be the beginning of the recovery. However, ACI's Behnke says that the timing is difficult to predict. "It is ironic the region expected to lead the charge is in the worse shape of all because of SARS," he adds.
In its latest forecast, ACI believes traffic will rebound sometime in 2004. Moreover, it has not changed its overall belief that the business has strong fundamentals for long-term growth. ACI predicts that in the 20 years through to 2020, traffic will rise on average at 3.4% per year, with the Asia-Pacific region leading the way with 5.4% growth. Behnke suggests that the recovery will be uneven, not just on a regional basis, but within regions as traffic on certain city pairs rebounds faster than others.
The hope is that the situation will not get any worse. "This is the toughest challenge in the history of this sector," says Behnke. "Airlines feel the hit earlier than airports in many cases, but many airports are in dire financial straits as well."
Source: Airline Business
