The growing cost of airport infrastructure poses risks to the
global airline industry’s profitability and growth, the head of the
International Air Transport Association (IATA) said, adding a crisis due to
inadequate infrastructure was brewing almost everywhere in the world.
“We are headed for a crisis… Infrastructure in general is not
being built fast enough to meet growing demand,” Alexandre de Juniac, CEO
General of IATA, an airline industry lobby group, told a conference on Monday
ahead of the Singapore Airshow.
He said airport privatization is among major reasons driving
cost rises when the industry needs affordable infrastructure to accommodate
“Our members are very frustrated with the current state of
privatized airports. By all means invite private sector expertise to bring
commercial discipline and a customer service focus to airport management. But
our view is that the ownership is best left in public hands,” de Juniac said.
He cited the proposed £14 billion ($19.8 billion) cost of a
third runway at London’s Heathrow Airport and the development of a fifth
terminal at Singapore’s Changi Airport as cases where it was crucial that costs
were kept under control.
“We must pay attention to these costs from the beginning,” de
Juniac said. “We would like to avoid big projects in which we see overruns
because the infrastructure is fantastic but it is very costly.”
He said Asia Pacific needs to make much faster progress to
address bottlenecks, and that some big cities such as Jakarta, Bangkok and
Manila are in desperate need of capacity improvements.
Global airline profits are expected to rise to a combined $38.4
billion this year, according to IATA forecasts, but net profit margins at 4.7
percent remain low by the standards of other industries.
exuberance is limited,” he said.