Our air travel is about to get even less romantic
Soaring roofs, Prada concessions and day spas are a symptom of the inefficiencies of our congested airports
For all the disagreement in the industry about the future of aviation, there’s perfect accord on one point: There’s going to be a lot more of it. The world’s air passengers flew a combined 7.64 trillion kilometers (4.75 trillion miles) in 2017, according to Boeing Co.’s latest 20-year market outlook. By 2037, that will rise to 18.97 trillion kilometres, with about 40% of the increase happening within five intra-regional markets: China, India, North America, Europe and Southeast Asia.
That’s sparking a battle over the biggest bottleneck holding back this growth: airports. The governments that still own many of them should be more open to privatisation to cover a $78 billion funding gap in needed capital investments, the Airports Council International, an industry group, argued in a report earlier this year.
Airlines, airports’ biggest customers, see things differently: Costs at privatised terminals are higher and governments should be cautious about such actions in the interests of expanding the aviation sector as a whole, the carriers’ body, the International Air Transport Association, argued the same month.
Privatising an airport doesn’t necessarily make it more efficient. One 2008 study found there was little difference between the performance of airports 100%-owned by commercially-oriented government corporations and those majority controlled by private businesses. The key is instead to avoid structures where the incentives for managers are confused or misaligned, such as where private companies are brought in as minority investors or where managers are essentially bureaucrats swayed by political imperatives. There’s a better solution out there, but it’s not likely to be very attractive to incumbent airlines, airports, or passengers enamored of the current generation of gleaming terminals: Build more, cheaper airports.
For all that airlines like to see airports as monopolies, there’s often a great deal of competition between them. The route planning and customer proposition needs of major airlines are best served if they can funnel all their passengers through single state-owned megaairports. Charges may be somewhat higher, but incumbent players will end up with dominant positions, excellent connectivity with other flights on their networks, and infrastructure funded from the public purse below the cost of capital.
That’s probably how the world will accommodate its future demand for air travel, but don’t expect it to be as gleaming as the present. Soaring architect-designed roofs, Prada concessions and day spas are all in their way a symptom of the inefficiencies of our current congested airports. So savour the boutique shopping and caviar bar at your next visit to an airport. Outside the walled gardens of business-class lounges, the future of aviation is likely to be a whole lot more functional.