covid-19: economic impact analysis and the path to recovery
TRANSCRIPT
COVID-19: Economic Impact Analysis and the Path to Recovery
14 July 2021
Today’s agenda
The continuing impact of the COVID-19 pandemic and prospects for recovery
Key findings and policy considerations will also be
presented from ACI’s new publications:
• The Long Term Carbon Goal Study, and
• The Global Outlook of Airport Capital
Expenditure: Meeting Sustainable Development
Goals (SDGs) and future air travel demand.
Luis Felipe de OliveiraDirector General
ACI World
Patrick LucasVice President, Economics
ACI World
Roadmap
Immediate impact of the pandemic on the airport industry
Pathway to recovery in terms of passenger traffic scenarios
Beyond the short-term crisis – Meeting future airport capital needs
Scale of the COVID-19 impact on global passenger traffic
Back to the future
Source: ACI World
9.1
3.6
-
2
4
6
8
10
12
14
1991 1994 1997 2000 2003 2006 2009 2012 2015 2018 2021 2024
Pas
sen
gers
(B
illio
ns)
BAU pax forecastPre-COVID-19
3.7% CAGR (2019-2040)
2019 pax traffic
Projected pax recovery
9/11 GFCSARSAsian financial
crisis
It could take ~20 years to get back to original trend – Business-As-Usual forecast
(BAU – green line)
A 2-year loss of over 10 billion passengers versus the pre COVID-19 forecast
Global passenger traffic in 2020–2021
Source: ACI World
-23%
-89%
-70%-64%
-67%
-60%
-44%-33%
2.1
2.32.5
2.2
1.7
0.3
0.8 0.8
0.7
1.0
1.51.6
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2019 2020 2021
Pas
sen
gers
(B
illio
ns)
Projected pax(baseline scenario)
Estimated losses
2020: >5.9 billion passengers (-62%)and 129 billion USD loss
2021:>5.0 billion passengers (-51%)and 108 billion USD loss
BAUPre COVID-19
forecast
Historical pax
Airport revenue streams – The way we were
Distribution %, 2019
Source: ACI World Airport Economics Survey; n=949
>70% of non-aero
revenues are pax
dependent
Aero51% Non-aero
48%
Non-operating
1%
ASP
MEA
Global
Aero 54%
Non-aero 40%
Collapse in revenues with high fixed costs
Economics of airports amidst the pandemic
Source: ACI World, Airport Economics Survey n=949
70 USD129 USD
Huge airport revenue losses in 2020 (billions USD)
55%
>35%
10%
Semi-fixed and variable costs
Direct fixed costs
Taxes
Distribution % of airport costs
Back to 2019 levels – Potential post pandemic boom?
Consumer confidence index
Source: OECD
Q2 ‘21
Post pandemic boom ≈vaccine confidence/effectiveness + vacation deprivation
Q2 ‘20
0
100
200
300
400
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Mill
ion
s (d
om
est
ic p
ax)
2021 2020 2019
-
100
200
300
400
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Mill
ion
s (i
nte
rnat
ion
al p
ax)
2021 2020 2019
-
2
4
6
8
10
12
14
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Mill
ion
s (d
om
est
ic p
ax) Russia
2021 2020 2019
-
10
20
30
40
50
60
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Mill
ion
s (d
om
esti
c p
ax) China
2021 2020 2019
Domestic versus international passenger traffic
Global airport pax traffic – A tale of two markets
Source: ACI World
May 2021 YTD vs:
2020 YTD: +7.2%
2019 YTD: -45%
-84% May 2021 YTD vs:
2020 YTD: +76%
2019 YTD: -21%
-34%
+0.4%
+27%
May 2021 YTD vs:
2020 YTD: -68%
2019 YTD: -86%
Domestic – Pent up demand
International – Quarantines and restrictions
May 2021 YTD vs:
2020 YTD: +79%
2019 YTD: +8.2%
Scenario forecasting 2021 – 2025
Outlook for passenger traffic recovery
Low scenario – 2024 return
• Effective vaccine(s) in 2021 but complex
supply chain requirements
• Limited vaccine supply with new variants in
major markets
• Fear to travel still present
• Prolonged economic downturn
• Slow airline fleet recovery
46
107
53
101100
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Tota
l Pax
-In
dex
ed 2
01
9 =
10
0
Back to 2019
passenger
Volumes
(Baseline
scenario)
Revised projection (baseline) – 2023 return
• Effective vaccine(s) mostly distributed in the
second half of 2021 to major markets
• Gradual removal of international restrictions
• Strong rebound in pax confidence
• Rapid airline fleet recovery
Source: ACI World
100 26 41 74 92 106 118
2019 2020 2021 2022 2023 2024 2025
International baseline pax forecast(indexed, 2019=100)
10048 61 94 107 117 124
2019 2020 2021 2022 2023 2024 2025
Domestic baseline pax forecast(indexed, 2019=100)
The demographics of aviation
Long term fundamentals still apply in post-COVID world
~40% of world’s population presently
resides in these countries:
China
India
Indonesia
Viet Nam
• 80% of the world’s
population resides in
emerging markets and
developing economies
• Burgeoning middle class
and propensity to travel by
air
• By 2040, 45% of global
traffic is expected to pass
through airports in the
Asia-Pacific region
Source: ACI World Airport Traffic Forecasts; United Nation Population
2040, 68.5%
India
2020, 69.7%
Brazil
45%
50%
55%
60%
65%
70%
75%
1950 1965 1980 1995 2010 2025 2040 2055 2070 2085 2100
Share of working age population for selected countries (1950-2100)
Supplying longer term demand
Airport capital investments (CAPEX) to meet long term air transport demand
CAPEX Projections:
US $2.4 trillion in airport CAPEX needed to meet long run
air transport demand (2021 to 2040)
≈ GDP of some G7 countries
US $1.7 trillion in brownfield projects
US $730 billion in greenfield projects
Impact of COVID-19:
33% decline in CAPEX for 2020 as
compared to 2019 (CAPEX deferment
measures)
Share % of CAPEX investments by region (2021-2040)
Projected CAPEX – greenfield versus brownfield investments (2021-2040)
Source: ACI World; CAPA; OECD; Oxford Economics’ calculations
30%
70%
Impact of the infrastructure gap
Foregone benefits – Sustainable Development Goals (SDGs) at risk
Infrastructure gap:
Foregone passengers
Constrained demand
Unconstrained demand: 19.7 pax
Global airport passenger traffic (billions) Foregone socio-economic benefits by 2040Per 1 million foregone pax
10,500 fewer jobs
US$346 million less in GDP
Airport related SDGsSource: ACI World Airport Traffic Forecasts; Mott MacDonald analysis of airport capacity utilization; Oxford Economics’ calculations
The Long Term Carbon Goal for Airports
Source: ACI World Long Term Carbon Goal Study
“ACI member airports at a global level commit to reach Net Zero
Carbon emissions by 2050 and urge governments to provide the
necessary support in this endeavour.”
Goal
Carbon neutrality and net zero CAPEX
Capital outlays – The cost of airport decarbonization
*Based on various studies: • New Buildings Institute: Net Zero and Living Building Challenge Financial Study: A Cost Comparison Report for Buildings in the District of Columbia;• Canada Green Building Council: Making the Case for Building to Zero Carbon.
The Net Zero CAPEX premium for airport terminals – Rules of thumb
Brownfield retrofit Greenfield construction14%-19%premium
8%premium
Carbon neutrality – What can we learn from history?
Historically, airports that achieve carbon neutrality statusinvested an average 12% more in capital and take an average of 6.1 years to go from no accreditation to carbon neutral
Source: ACI World Global Outlook of Airport Capital Expenditure; Oxford Economics’ calculations; Airport Carbon Accreditation dataset – ACI Europe
Investment pathways for net zero
The importance of the electrical grid for airport decarbonization
Hierarchy of emissions reduction measures
Depending on circumstance –
significant retrofits and major
CAPEX may not be required
NZB
QuestionsPlease submit your questions to the Panel through the chat function.
Stay on top of news
Follow ACI World
• COVID-19 news hub
• ACI Insights blog
Thank you