As the world’s biggest airlines enjoy a quick recovery from the economic wounds inflicted by the pandemic, airports are left struggling. While soaring ticket prices line the pockets of major carriers, airports say they’ve been forgotten at the gate. Corporate travel manager American Express Global Business Travel has analysed tens of thousands of client transactions on international flights to and from Asian destinations and predicts that flying will be far more expensive this summer. Tight capacity going into the peak season and eager customers are bolstering fares. Aer Lingus and British Airways owner IAG posted a surprise quarterly profit last month and raised its outlook for the full year. Dubai’s Emirates and Singapore Airlines reported record earnings, with Australia’s Qantas on course to follow suit.
However, airports continue to struggle. London Heathrow, the home base of British Airways, has warned of ongoing losses and is withholding dividend payments to its owners. It is also wrestling with airlines on the increase in fees it can charge airlines. Ryanair routinely threatens to leave over such costs and has scaled back in Germany, saying high airport fees there make operations unsustainable at airports like Frankfurt. From terminal expansions to runway extensions, electrification and the installation of upgraded scanning devices, airports are continuing to pour resources into their facilities.
International Air Transport Association (IATA) director general Willie Walsh has lobbied fiercely to prevent tariff increases from endangering airlines’ recovery. Airports Council International Asia-Pacific, a trade group, has said that the sharp increase in airfares is hampering the recovery of the entire aviation ecosystem. Many of its members have lost money for 10 consecutive quarters. The group said it wants carriers to exercise responsible and fair pricing that supports the travel recovery and consumers’ best interests. The frequent jousting over airport landing fees has intensified in the wake of the health crisis. Airlines received more direct financial support during the pandemic and now have the freedom to quickly raise prices.
Heathrow has sought backing from Britain’s Civil Aviation Authority to raise fees, saying any higher costs shouldn’t be borne by travellers but instead shared between airlines and the airport. Critics of higher fees, such as Virgin Atlantic, have said such a move would only benefit the airport’s mainly foreign shareholders and represent a bad deal for consumers and airlines. Animosity between airports and airlines boiled over last year when Heathrow imposed a cap of 100,000 departing passengers a day through much of the summer schedule amid a lack of workers. The move drew the wrath of airlines including Emirates, which flies about half a dozen Airbus A380s into London each day and said in July that Heathrow “chose not to act, not to plan, not to invest”.
Mabel Kwan, a Singapore-based managing director at aviation consultancy Alton, said there is always a bit of tension between airports and airlines, which is typical between a supplier-customer relationship. Airlines are a very powerful customer and client from a negotiating standpoint, and fee increases are politically and socially sensitive. Airports also earn revenue from commercial rents, advertising, and other items often dependent on volumes, which have varied across the global recovery. In the background of the rift is a peak travel season just getting under way — in Asian countries such as China, international flights have recently reopened after tighter covid restrictions.
Despite the tension between airlines and airports, air travellers will be paying more. Economy and business-class passengers on the most in-demand corporate routes are seeing higher prices this year. “We expect air fares to continue to rise this summer,” said Jeremy Quek, at Amex. “The level of increases will moderate a little as airline capacity recovery continues to grow through the second half of 2023.” As the industry takes off, airports must not be forgotten at the gate. They require investment to upgrade facilities and support the travel recovery and consumers’ best interests.