Will 2024 be boom or bust for global airport construction activities?

An airport construction site in Singapore. Asian countries are leading the way in airport construction projects for 2024. (Photo credit: Adobe Stock)

The first steps of a multi-year plan to rehabilitate roadway tunnels around the Detroit, Michigan, US, international airport started on 8 January, local media reported, and while air travel construction across the globe has increased annually since 2022, the number of projects and their total value is still substantially down from 2019.

2024 airport construction outlook

The Centre for Aviation (CAPA), in its 2023 summary and 2024 outlook, said construction activities were in a “freefall” compared to pre-pandemic activity.

“Airport construction projects have been in decline, overall, for some time,” stated CAPA.

CAPA counted 1,089 existing projects from a December 2019 report at a value of US$634 billion. New projects totalled 288 and – when added together with existing projects – valued more than US$1 trillion.

In a CAPA report from November 2023, 514 projects were reported as “existing” with 187 logged as “new”. Combined, the cost of those projects equalled US$701 billion.

“To put it bluntly,” stated CAPA, “airport construction investment is somnambulating as a direct result of the Covid-19 pandemic, inflation, and global tensions; as indeed is investment in most other industries, together with stultified attempts at privatising assets, and there is no sign that any of these pressures will subside in the immediate future.”

Fewer grand builds

The DTW tunnel project, while one of the first to start the new year, is small in scope compared to other projects on the horizon. The Wayne County Airport Authority – the independent operators of DTW – awarded the first phase of the project in September 2023 to Toebe Construction for US$85.5 million.

As is the case in Detroit, CAPA noted that both private and public investment in airport infrastructure could be focusing on smaller-priced objectives and fewer grand projects.

“It is suggested that incremental development is more likely than large-scale projects until the dust has settled,” stated CAPA. “The way forward for existing larger airports globally will probably be one of incremental capacity increases by way of extension and refurbishment, or new piers, and in rarer cases, complete terminal buildings where they can be justified.”

As for the planet’s leaders in airport construction activities: Asia Pacific, according to CAPA, owned the largest share of airport projects in 2023 with 33.6%.

Privatised airport investments

Across the continent, airports will see plenty of face-lifts this year, but through varying strategies.

While CAPA expressed scepticism about privatising airport assets, countries across the globe have used private financing and investments to commence and complete major projects.

Last year, Thailand started construction of its Thai baht 290-billion (US$8.8 billion) U-Tapao aviation city.

It’s a private-public partnership that will transform U-Tapao airport into the country’s third main international airport.

In Canada, an investment from privately-owned Canadian airline – Porter Airlines – will bring to Montreal Saint-Hubert Airport (YHU) a 21,000 square-metre commercial air service terminal. Joining Porter in the initial estimated Canadian Dollar (CAD) 200 million (US$149 million) investment is Macquarie Asset Management, an airport asset operator and investing firm.

In a release by YHU, the new terminal was described as an “aeronautical hub, bringing together companies in the sector, flight schools, university research laboratories, air carriers and passengers.”

Globally, according to ACI World Inventory data, just less than half of airports are financed from private-sector stakes. Latin and Central America and Europe topped the list of most airports with private stakes (more than 70%), while African countries and the US had the least (10% and 4%, respectively).

Public airport investments

Leading the way in public investment of airport projects is the US, and CAPA predicts the country will top the sector this year.

“It is [probable] the [US will], for a change, be the most inviting prospect for the airport investment community in 2024,” CAPA stated.

The Detroit project, though modest, will be almost entirely funded by federal dollars, according to local media.

The money was made available through the US Infrastructure Investment and Jobs Act (IIJA), which set aside US$550 billion in new spending on infrastructure.

CAPA predicts, as the five-year window for IIJA projects expires in 2026, that contractors will have a bevy of new projects to bid on in America.

Los Angeles International Airport (LAX). (Photo credit: Adobe Stock)

Already, three of the US’s largest airports – LAX (Los Angeles), JFK (New York City) and LGA (New York City) – are in the midst of massive construction projects. The combined cost for those three transformations is more than US$40 billion with funding coming in part from the IIJA.

Ultimately, a combination of both financing methods seems to be the preferred status-quo in many sectors of the globe, and CAPA thinks it could lead to more work.

“The light at the end of the tunnel continues to be infrastructure-specific public-private partnership deals, which are becoming common in the US, where there is hardly any other form of private sector involvement in the airport business, and they are becoming more common and sought-after elsewhere.”