As passenger volumes have decreased dramatically, with facilities and resources made redundant and the uncertainty of traffic forecasts, airport operators across the globe are warning of worsening financial impact from the pandemic. The balance between revenues and incurred costs has got out of scale. This market and financial situation call on airports and investors to reassess airport assets and manage infrastructures and resources to ensure the financial stability of aerodromes.
Rightsizing is the only sustainable option to encounter the funding gap
State-owned, privatized and concessionary airports have three options to meet the current financial challenges to keep in business: apply for financial aid, sell the asset or optimize it. While cash injections are just a temporary instrument and do not solve the underlying cost issue airports are facing, the option to sell a single airport or an airport portfolio by the state or private investor is affiliated with high capital losses and no chance of recovery. Therefore, the only viable option is to optimize the airport organization, its strategy, infrastructure and operations to achieve a rightsizing. This will lead to initiating a transformation process and preparing for the future of the aviation industry.
The starting point of transforming airports is to optimize them
The “New Normal” situation must be defined by each airport to assess the consistency of its business model and to adjust to the future state of the industry. Thus, the process of rightsizing is inevitable for airports and investors to remain operational and “make money” sustainably, as organizations must shape themselves to be more efficient and streamlined incurring lower costs and unfolding higher revenue capabilities.
Sharing our expertise at GAD World and GAD Americas 2020
Global Airport Development Online Conference (GAD), November 11-13, 2020: Meet Lufthansa Consulting in virtual booths to discuss and exchange on airport development topics. Lufthansa Consulting’s expert teams will present a keynote on “Transformation to the ‘New Normal’ – Airport Rightsizing”, moderate discussions on new traffic forecasting methods and deliver workshops on the future perspectives of regional airports. GAD World 2020 event page
Further insights from Lufthansa Consulting’s aviation experts are available here.
Reach out to our experts: APcrisis-solutions@LHConsulting.com