Increased air travel and new aircraft deliveries will boost demand for airport operators
Los Angeles, CA (PRWEB) May 09, 2013
The Airport Operations industry has benefited from the recovery of air transportation industries over the past five years. Despite improving conditions in the years prior, revenue took a significant hit during the recession. Airport operators experienced a decline of 37.9% in revenue in 2009 because of plummeting demand from major airlines and lower passenger numbers. In 2010, major airlines announced capacity cuts, most of which remained in force. Higher fuel costs and slowing demand were the initial main drivers behind this decision; however, the receding economy took over as the major driver for capacity reductions, says IBISWorld industry analyst Jesse Chiang. Since then, however, the industry has experienced positive revenue growth, as demand from domestic and international airlines has increased. The industry is expected to charge ahead in 2013 as revenue grows an estimated 9.3% to $6.6 billion. Despite such growth, over the five years to 2013, IBISWorld expects revenue to fall at an annualized rate of 1.8%, as key markets have recovered slowly.
Over the five years to 2013, revenue has been slow to rebound from the recession, as key markets have grown tepidly, continues Chiang. Demand from domestic airlines has increased at an average annual rate of 0.7% over the five years to 2013, while demand from international flights has increased 0.2% over the same period. Corporate profit, which increased at an average rate of 9.6%, usually drives growth because businesses spend on both private and commercial flights. Commercial flights tend to drive airport revenue, as they are larger in scale, while private flights mostly drive revenue for independent fixed-base operators (FBO), who are privatized companies that specialize in providing a bundle of airport services for private planes. Still, corporate profit did not do much to improve industry revenue, as many companies are hesitant to spend large amounts on transportation given the uncertain economic forecast. The Airport Operations industry has a medium level of concentration. The four major players are BBA Aviation PLC, The Prot Authority of New York and New Jersey, Atlantic Aviation FBO and City of Los Angeles. Concentration has remained relatively constant during the past five years, with operators continuing to struggle to gain more market share in this declining industry.
Demand for air travel has recovered strongly, while new aircraft deliveries have and will continue to increase the need for infrastructure developments. IBISWorld anticipates that the level of industry concentration will be stable during the next five years. The number of new players entering the industry will be minimal, but airports are increasingly becoming larger to cater to rising demand for air travel. Some state-owned airports have already formed public-private partnership agreements, and this practice is expected to increase in the future as they seek additional capital to expand their operations. In addition, operators will face increasing competition from the private sector, increasing demands from consumers regarding services and pricing, changes in consumer preferences (e.g. opting for no-frills carriers and creating the demand for low-cost airlines) and increasingly stringent safety regulations introduced by the government. For more information, visit IBISWorld’s Airport Operations in the US industry report page.
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IBISWorld industry Report Key Topics
The industry includes businesses that operate international, national or civil airports or public flying fields. It also includes operators that support airports, offering aircraft refueling, aircraft parking, hangar space rental, air traffic control services, cargo handling services and others. This industry does not include wholesaling fuel at airports, providing janitorial services at airports, providing food services at airports and conversion and rebuilding of aircraft.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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