INTHEBLACK June 2026 - Magazine - Page 24
F E AT U R E
TRANSPARENCY IS KEY
For its part, the Australian Airports
Association also supports strong regulatory
oversight and transparency in the sector.
Westaway notes that four successive
Productivity Commission inquiries have
found that the current regulatory framework
remains appropriate and that airports
“have not systematically exercised market
power”. He also points to the commission’s
previous findings that a negotiate-arbitrate
model for airports would likely deliver
limited benefits and could introduce
additional regulatory burdens.
“Importantly, the Productivity Commission
has also made clear that underinvestment
in infrastructure could itself be a form
of exercising market power, which is why
continued, large-scale capital investment
is so critical,” he says. Airport charges set
through long-term commercial agreements
remain “a relatively small component
of overall airfares and help fund these
major upgrades”.
Referencing the highly competitive Asian
market, Saxena believes the “greedy airport
monopoly” narrative is outdated, at least
for large aviation hubs. He says there
are more structural checks on pricing than
many realise, including the regulation of
aeronautical charges. Likewise, he notes
that non-aeronautical pricing is competitive,
with global brands at leading airports such
as Changi in Singapore and Incheon in
South Korea having to compete with
high-street counterparts on pricing. As a
result, they do not pursue price premiums
at their airport outlets. “At the network level,
airports compete for airlines,” Saxena says.
“Pricing incentives, service commitments,
route support: these are competitive levers.
They constrain tariffs naturally.”
BEYOND AERONAUTICAL CHARGES
Just how big is the international
airport business?
According to the Airports Council
International (ACI), global airports will
require US$2.4 trillion (A$3.35 trillion)
in capital expenditure from 2021 to 2040
to meet future demands. McKinsey forecasts
that by 2053, annual aircraft movements
(take-offs and landings) will hit almost
176 million, almost twice that of today.
Such scale demands that modern
airport business models extend far beyond
aeronautical operations. While landing fees
and passenger charges make up the biggest
proportion of airport income, the best
24 INTHEBLACK June 2026
airports are ramping up non-aeronautical
revenue streams such as car parking,
commercial leasing and property
development. The ACI estimates that
non-aeronautical revenue now accounts
for 36.7 per cent of total revenue globally.
Elite airports have become destinations
[see breakout on previous page], not mere
transportation hubs. Saxena notes that
Hamad International Airport in Doha uses
public art and premium lounges to anchor
high-spending transit passengers. Frankfurt
and Schiphol airports in Europe analyse
loyalty data by layover duration and flight time
to push personalised offers, essentially turning
a three-hour connection into a revenue
window. “This is no longer a side game,”
he says. “Dwell-time monetisation is now
the primary margin lever at leading hubs.”
In Australia and elsewhere, car parking
is seen as the “gold mine” of airports,
delivering exceptionally high margins.
Sydney, Melbourne and Brisbane airports
have also expanded their logistics and
warehousing zones in recent years,
capitalising on the e-commerce and
air-freight boom.
In Adelaide, Cox says the airport is
delivering a A$1 billion infrastructure
program, of which A$600 million is allocated
to aeronautical infrastructure. “This investment
supports our record passenger numbers, which
topped 9 million at the end of 2025,” he says.
About half of Adelaide Airport’s revenue
comes from aeronautical charges, with the
remainder being drawn from car parking,
retail and land development. “These revenue
streams provide important services and
amenities for passengers, while enhancing
the quality of facilities available,” Cox says.
“Around 75 per cent of revenue is linked
to passenger volumes in some way, being
aeronautical charges, car parking and retail.
Property and development is about
25 per cent of revenue, which provides
some important diversification for the
business and contributes to the broader
function of the economy through providing
space and facilities.”
He adds that diversification of revenue
streams reduces overall business risk,
enhances credit quality and provides
ongoing stable revenue in the event of
an aviation shock such as the fallout from
the COVID-19 pandemic.
Westaway believes Australian airports can
learn from international peers such as Changi
and Schiphol. Changi has invested heavily
in digital, streamlined border processes that
