COVID-19: Economic Impact Analysis and the Path to Recovery
Transcript of COVID-19: Economic Impact Analysis and the Path to Recovery
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COVID-19: Economic Impact Analysis and the Path to Recovery
14 July 2021
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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.
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Luis Felipe de OliveiraDirector General
ACI World
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Patrick LucasVice President, Economics
ACI World
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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
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Scale of the COVID-19 impact on global passenger traffic
Back to the future
Source: ACI World
9.1
3.6
-
2
4
6
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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)
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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
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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%
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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
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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
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0
100
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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
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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
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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
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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%
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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)
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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)
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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%
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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
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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
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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
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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
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QuestionsPlease submit your questions to the Panel through the chat function.
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Stay on top of news
Follow ACI World
• COVID-19 news hub
• ACI Insights blog
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Thank you