The aviation infrastructure market is anticipated to register a CAGR of over 5%, during the forecast period.
- Airports play a vital role in the economic development of a nation and facilitate the fast movement of people and cargo, thereby fostering trade and commerce. Air passenger traffic and the number of aircraft handled by airports across the world is increasing every year, which has resulted in terminals becoming remarkably crowded. Several airports are struggling with the current volume of passengers. As the number of air passengers is expected to almost double over the next two decades, there is an increasing need to expand the existing airport infrastructure to cater to future growth in air traffic.
- Additionally, as airlines look to expand their connectivity, demand is likely to grow for airport infrastructure in smaller cities that have plans to construct new airports. Today’s airports need longer runways, more gate capacity, and modernized air traffic control systems, which, in turn, is further expected to propel the growth of the aviation infrastructure market over the next decade.
- However, airports face a set of challenges related to longer lead times, intensive stakeholder discussion for years, land acquisition, political issues, and regulatory framework.
- In terms of growth, the Asia-Pacific region is expected to lead the market, followed by North America over the next 10 years, as several countries in these regions look to enhance their air connectivity and infrastructure.
Key Market Trends
Construction of New Terminals to Increase Passenger Handling Capacity
The air passenger traffic is expected to increase by over 4%, annually, on average, during the forecast period. This will put an increasing pressure on existing airports to expand their passenger handling capacity through restructuring or by constructing new terminals. For instance, the Sri Lankan government announced its plan to construct a new terminal at the Bandaranaike International Airport to increase its passenger handling capacity. With the construction of the new terminal over the next three years, the government plans to increase the airport’s passenger handling capacity to 20 million passengers per year. Likewise, the construction of Terminal 3 at the Frankfurt Airport is underway and is expected to increase the passenger handling capacity of the airport by 21 million annually, by 2023. The approved budget amounts between EUR 3.5 and 4 billion and includes over 500 individual contracts to various companies. Similar constructions are ongoing in several countries across the world to cater to the growing air passenger demand.
Asia-Pacific to Witness the Highest Growth Rate During the Forecast Period
The air passenger traffic has increased with the highest pace in the Asia-Pacific region, over the past decade. However, the growth, in terms of airport infrastructure, has been slow, which has resulted in increased congestion. China and India are the two top countries in terms of air passenger handling and are expected to become aviation hubs by the end of the forecast period. According to IATA, China’s aviation sector is anticipated to surpass the US aviation sector. However, the recent outbreak of coronavirus is expected to shrink China’s economy during the first quarter of 2020. The Civil Aviation Administration of China (CAAC) announced its plan to construct over 200 new airports to reach a target of 450 airports by 2035. Between 2014 and 2019, China spent about USD 70 billion in ground infrastructure and upgrades of airports and air traffic control systems. Since the start of 2020, China’s National Development and Reform Commission (NDRC) approved three new airport projects, including a third runway at Shenzhen airport, worth a total of about USD 13 billion. Other countries in the Asia-Pacific region, like India, Singapore, Thailand, Indonesia, and Japan, also have plans to invest billions of dollars on airport infrastructure, during the forecast period.
The aviation infrastructure market is fragmented. Some of the prominent players in the market are Hensel Phelps, Turner Construction Company, Skanska, Austin Industries, and AECOM, among others. One of the growth strategies adopted by the players is to increase their workforce steadily to be able to complete projects on time. Companies are also striving to increase their consulting and management services, along with their construction capabilities to obtain new long-term contracts. Airport construction companies work closely with the airport authorities in understanding the requirements and barriers faced by the airports during operation. Construction companies are rapidly adopting advanced technologies, like augmented and virtual reality (VR), and small drones, among others, that can help them in reducing the time required to approve design changes and to better understand the bottlenecks in construction.
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