Australia
China
India
Indonesia
Japan
Malaysia
Philippines
Singapore
South Korea
Taiwan
Thailand
Vietnam
The Asia aviation sector consolidated drastically during the pandemic but is now showing signs of recovery. With the rates of passenger and freight traffic increasing, the number of aircraft being handled by airports too is rising, propelling the demand for efficient and better ground handling systems and infrastructure at terminals.
The airport infrastructure market in smaller cities in India and China is expected to witness growth, owing to the efforts taken by respective governments to promote air travel. Since modern airports are being constructed with longer runways, more terminal gates and advanced air traffic control systems, the demand for such infrastructure components is expected to rise and propel the aviation infrastructure market in the Asia-Pacific region, a Mordor Intelligence report said.
GMR Group, GVK Industries Limited, JLL Inc., AECOM Limited, and Turner Construction Company are some of the major players in the Asia-Pacific aviation infrastructure market. They are focusing on the constant development of the workforce to execute the on-time completion of infrastructure development projects.
Mega plans for aviation infrastructure
For instance, Singapore is constructing a fifth passenger terminal at its central Changi Airport at an estimated cost of $10 bn. The plans for this project were delayed due to the pandemic.
Similarly, South Korea has plans for the biggest airport infrastructure in the region, worth the tune of $46 bn, as per estimates by Fitch Solutions Country Risk and Industry Research. Another major airport project is the Gadeok Island Airport in Busan, which is likely to come up offshore on a floating structure in a decade.
The state-owned Airports Corporation of Vietnam (market cap of $2.90 bn), which operates the civilian terminals in the country, plans to expand and upgrade 23 facilities through 2025 to accommodate 173 million passengers annually.
As expected, investments in the airport infrastructure had shrunk during the pandemic, and it is feared that recovery may be impeded by the economic effects of the Russian invasion of Ukraine. However, with the pandemic easing in many regions of the world, plans are once again being revived once again.
India is also set to expand the number of its airports from 130 to around 220. The Philippines is working on the expansion of its Sangley Point International Airport in Manila to handle more than 100 million passengers annually.
According to a report released by Fitch in May, currently, 200 airport projects are under construction in Asia has at an estimated combined investment of $231 bn in investment. Fitch, however, observed that the future is unclear owing to the “residual impacts” of the Covid-19 pandemic, for instance, reduced revenue earnings in previous years and unsure demand for airports in the future. According to Fitch, this will possibly depend “on project activity in the airport segment, especially over the short term.”
China to lead Asia aviation
In 2019, China occupied the largest market share in airport infrastructure construction and is expected to continue its supremacy during 2022-2027. It is projected that the aviation sector of China will surpass the aviation sector of the U.S., becoming the biggest in the world. By 2035, China Aviation Administration plans to reach its target of 450 airports by constructing 200 new airports.
China has spent nearly $70 bn between 2014 and 2019 on the upgradation of ground infrastructure, air traffic control systems, and others. In 2020, China’s National Development and Reform Commission (NDRC) announced three airport projects, including the development of the third runway at Shenzhen Airport, worth $13 bn. Hence, the market in China is expected to grow further, driven by the ambition of airport expansion and construction plans and the ongoing activities in this regard.
The focus of the government on developing general aviation and the growth in defence spending to bolster the country’s military aircraft are also expected to generate new avenues for market growth in China in the years to come.
Airline fleet expansion to drive market
The growth in passenger traffic across various countries in the region has necessitated the investment of the governments toward the construction of new airports as well as the expansion of airports. According to International Air Traffic Association (IATA), the Asia-Pacific air passenger traffic showed steady growth in 2019. Air passenger traffic demand grew by 4.8% compared to 2018, down from 8.6% annual growth in the previous year.
However, airlines already placed several aircraft orders in the last few years to expand their fleet sizes to cater to more passengers, with a positive outlook for the regional and global air passenger traffic numbers in the past. Major airlines like Indigo, SpiceJet, Lion Air, and VietJet among others have an order backlog of more than 200 aircraft that are expected to be delivered during the forecast period.
Passenger traffic and Asia aviation
Many countries in Asia are continuing with their airport expansion plans because they believe that passenger traffic in the region will eventually rebound higher than ever before.
Talking about the Changi expansion, Singapore’s transport minister S. Iswaran said that “considering the current and expected recovery in air travel demand, we have a renewed momentum to secure our infrastructural capacity for growth.”
However, considering how far Asia still needs to go to recover and the other pressures hindering airport projects, it seems that transportation hubs in the region may be in for more tumultuous times.
