Global airport growth trends are reflecting the recent upside-down pattern of the world’s commercial air transportation economies. After several sluggish years of growth, the most mature aviation economies have returned to sustained growth, while some previously booming emerging economies are sliding.

Overall, global airport traffic across the major airports continued its sustained upward trajectory last year, seeing growth of 6.6% in 2015 compared with 5.6% the previous year. But there are stark differences in traffic growth depending on where you look.

The findings of the 2016 Arthur D Little World Airport Report mirror the fortunes of the world’s six key economic regions, with poor performance among Brazilian airports reflecting the economic downturn in that country, for example. Brazil’s economic backslide in turn hit the overall performance of the Latin American region, although above-average growth in some of the region’s countries helped sustain a healthy 5.4% growth overall. Looked at over the past five years, however, South America is continuing its steady decline in growth, which was 8.8% in 2011. Latin America’s share of global airport traffic has also remained largely static over the last five years, at approximately 8%.

In contrast, North America, which recorded minimal growth following the global economic downturn, began a return to sustained growth in 2014, with an increase of 3.3%, and last year saw its airport traffic grow 5.3%—its highest since 2011. That growth once again establishes North America as the busiest region for airport traffic (accounting for 30.4% of global airport traffic in 2015), a position previously held by Asia for three years and which was largely driven by growth in China.

Meanwhile Western Europe—the other major mature aviation market—has also overtaken Asia in terms of global market share, accounting for 25% of global airport traffic in 2015 compared to Asia’s 24.8%. But Western Europe has now dropped well behind North America in the geographic breakdown of airport traffic, even though it recorded regional growth of 5.5%, up from 5.1% in 2014 and better than North America’s 5.3%.

Growth in Asia, however, remains among the highest in the world, up 9.8% in 2015, almost matching the Middle East at 9.9%.

Africa is the only region that posted a decline, with airport traffic falling 1.6%. This is a marked downturn from the 5.4% growth recorded in 2014, but follows an established pattern in the region over the last five years that tends to see a year of growth followed by a year of decline.

Eastern Europe and Russia, while still growing, have seen a sharp fall in growth to 3.5% in 2015, compared with 13.5% in 2011. Oceania saw airport traffic pick up again in 2015 from a four-year low of 1.9% in 2014.

A number of individual airports are bucking their regional trends either by performing exceptionally well, or significantly underperforming.

“In 2015, traffic growth per continent or per country or per type of airport has not been what we might normally expect to see,” said Arthur D Little partner Mathieu Blondel in an exclusive briefing for ATW. “Major countries grew faster than developing or emerging countries; major airports and major hubs experienced stronger growth than secondary airports challenging for market share. These are unexpected polarities. The sorts of polarities we have come to expect or that we have experienced over the years have been disrupted this year.”

The Arthur D Little report incorporates data published by the Airports Council international (ACI) plus a number of additional regional airports, resulting in more airports (1,405 compared to ACI’s 1,021) and more traffic than the ACI data. It covers a total of 6.8 million passengers (compared to ACI’s 5.9 billion), with hubs (primary and secondary) accounting for less than 50% of these. In the Arthur D Little survey, primary hubs accounted for just under 2 billion passengers (29%); secondary hubs for 1.2 billion passengers (18%); and regional airports for 3.7 billion passengers (54%).

“Our data includes more airports with higher growth rates in Asia-Pacific, Europe and North America, and about 1 billion more passengers, so we show growth patterns that are a bit different from the ACI data,” Blondel said. “We have more regional airports where growth rates are sometimes faster and we are a bit more bullish globally.”

Regional airports accounted for 62% of growth between 2014 and 2015, with secondary hubs accounting for 16% or growth, and primary hubs 22%.

The Arthur D Little report also compares traffic growth of individual airport companies or groups to economic growth. As a rule of thumb, the ratio between traffic growth and GDP growth in 2015 was generally accepted to be 2.1, meaning traffic growth was about 2.1 times GDP growth. This, Blondel said, was “a very high multiplication factor” because it used to be in the range of 1.5. This was more “globally acceptable,” he said, “because major economies could be expected to grow 1X and emerging economies to grow 2X or even faster, giving a blended average of 1.5X. Now all major countries with mature economies—including France, Japan, the UK, US, and Spain—are tracking on or above the 2X trend.”

Blondel said some curious patterns emerged in 2015, with Indonesia, for example, again showing a decline in airport traffic despite strong economic growth (close to 5%), probably as a result of continuing infrastructure constraints. Nigeria also experienced a fall in traffic despite GDP growth just above 2.5%, while Russia and Brazil both saw flat growth on top declining GDP growth.

In Australia, Egypt and Malaysia, airport traffic growth was less than 1X GDP growth, with Thailand and Vietnam at the other extreme outstripping GDP growth by a significant margin.

And in 2015, India outperformed China, reversing a fairly established trend. India enjoyed airport traffic growth in excess of 2X GDP while airport traffic growth in China was about 1.5X GDP. “Growth is still strong in China, but maybe less predominant than it used to be. India is catching up,” Blondel noted.

Regional breakdowns

Europe

Turkey was overtaken by the UK as the main engine for growth in Europe, dropping into second place after several years of strong growth. It is still adding passengers, but traffic levels have been particularly affected by the slowdown in Russia, which led to fewer Russians traveling abroad and fewer Russian tourists traveling to Turkey. In addition, security concerns have hit inbound tourism and business flows from Europe. Most of the growth that exists in Turkey is connecting traffic through Istanbul and domestic traffic riding on the wave of an emerging economy.

Russia has plummeted from being a key engine of growth for Europe over the last few years, and third largest in 2014, to being the only major economy to see a small decline in 2015. Both domestic and international markets stalled in 2015, with the economic crisis, currency issues and a general cooling of relations between Russia and the West affecting airport traffic. This impacted Turkey and other countries. The French city of Nice, for example, traditionally a major tourist destination for Russian travelers, saw a 15% drop in tourist traffic. [These slowdowns occurred before the 2016 terrorist attacks in France and Turkey and the attempted coup in Turkey, so it must be assumed the drops in traffic will be sustained or worsen].

In contrast, growth in Europe’s southern destinations was particularly strong, with Greece and Portugal seeing increases above 10%, and Spain above 5%. Growth was mostly driven by inbound tourism, with demand from northern European countries recovering at the expense of Turkey and North Africa, which are perceived as having security issues.

“This has helped some of the southern European countries to grow much faster than their economies,” Blondel said. “The economies of Portugal and Greece are still struggling and not in a very good shape, but in terms of air traffic the impact of tourism is very strong. Even though their overall economy is suffering, the tourism part of the economy is booming.”

Head north, and the numbers reverse. There was a slowdown in the Nordic economies, especially Norway and Finland, and airport traffic in Austria remained almost flat. This, Blondel said, was surprising because the economy is strong and the country has less than 5% unemployment, which should generate good traffic flows. However, there has been little growth in either inbound or outbound traffic despite the advent of low-cost carriers (LCCs). Blondel said that Austria’s long-term strategy to be a hub connecting destinations in Eastern Europe with Western Europe was compromised by the growth of point-to-point flights, and home carrier Austrian Airlines was slow to react to market changes.

The Arthur D Little report points out that what it describes as “challenger hubs”—airports such as Amsterdam, Madrid, and Istanbul vying to challenge the traditional dominance of the big intercontinental hubs—are growing faster than London Heathrow (LHR), Paris Charles de Gaulle (CDG) and Frankfurt (FRA).

“Among the major airports, these challenging players are positioning themselves as more attractive and dynamic,” Blondel explained. “It is less about capacity issues than about pricing, quality of service, marketing to airlines, good relationships, etc.”

Secondary hubs, such as Munich, Zurich, Brussels, Copenhagen and Rome Fiumicino, saw good rates of growth compared to Europe as a whole, but the more proactive airports were able to stimulate greater growth. Brussels, for example, was able to generate 6.9% more traffic in 2015, thanks to a dual strategy aimed at attracting LCCs (it now has more LCCs than any of Europe’s other major secondary hubs) and developing long-haul routes for market growth. For other reasons, namely industrial action and terrorist attacks, the picture for Brussels will be very different for 2016, but Blondel acknowledged that the long-term strategy was sound and one that other secondary hubs had been slow to adopt.

Barcelona and London Gatwick, however, also generated traffic increases in the order of 6% by developing more long-haul routes.

“We are seeing the rise of ‘megacity’ airlines or long-haul, point-to-point traffic,” Blondel said. “The main hubs are trying to maintain dominance in the long-haul sector, but secondary hubs are increasingly developing point-to-point routes, capturing market away from the big hubs. It is clear that LCC growth and the wider distribution of long-haul traffic are the main drivers of growth in Europe.”

North America

In the US, the East Coast continues to outstrip the West Coast by a significant margin in terms of airport traffic growth, mirroring the main concentrations of population and economic growth. Since 2001, East Coast airports have added more than 165 million additional passengers, while the West Coast has added just 67 million.

Growth at the main hubs across North America totaled 4.9% in 2015, with unexpectedly high growth at Chicago (9.9%) following completion of a major overhaul of the airside system at O’Hare, releasing much-needed capacity; and New York JFK (6%). Blondel pointed out that, freed from immediate capacity constraints, O’Hare could now be well placed to take back the position of busiest airport in the world from Atlanta.

“Atlanta is mainly a connecting platform: airport traffic is not really driven by the economy, business or tourism of either the city or the state of Georgia. The Chicago market, on the other hand, is much better positioned to drive up traffic, with high population growth and a vibrant economy. Now that it has capacity for growth, it might be able to take back the top spot from Atlanta, assuming that it does not hit a pre-recession plateau,” he said.

Like Chicago, San Francisco (6.2%) and Los Angeles (5.7%) have also reaped the rewards of investing in new infrastructure, with new or upgraded terminal facilities.

In Canada, traffic at Toronto increased 6.4%, largely in response to the city’s strategy of positioning itself as a main intercontinental hub and gateway to the region, as well as the increased competitivity of Air Canada and its LCC subsidiary Rouge.

But the key message from North America is that the big airports are capturing most of the growth at the expense of smaller airports. And the domestic market remains the predominant driver of growth in the region, accounting for almost 700 million of the 902 million passengers handled at North America’s airports in 2015. It is also the first year the domestic market has seen passenger numbers rise above the level recorded in 2007, just prior to the financial crisis, reaching a record 679 million passengers.

“The perceived wisdom regarding financial crises is that the effects will be reversed within three-to-five years. The recovery after the last financial crisis has taken eight or nine years—a much longer down cycle than we have seen before,” Blondel said.

In the international sector the recovery was much faster, with pre-recession traffic levels bettered by US carriers in 2010, and by foreign airlines the following year. Since then, however, there is a clear long-term trend of foreign airlines taking market share from US airlines for international traffic. Blondel said that 80%-90% of international traffic growth was being generated by foreign airlines, meaning that US airports were having to work hard at making themselves more attractive to international airlines.

Latin America

The Latin American market is highly concentrated, with just 10 of the 250 cities in the Arthur D Little database accounting for 60% of the market growth.

“This region is very polarized between the 10 biggest cities, with the biggest airports, and the rest. The pace of economic growth in the region suggests we should expect more development and faster growth at regional airports, and maybe this will change in time, but in the short term—maybe for the next five years at least—this very high concentration of the traffic is likely to persist,” said Blondel.

Brazil’s two main cities, Rio de Janeiro and Sao Paulo, saw virtually no growth at their airports in 2015, unlike most of the rest of the region. The northern-most countries of Latin America are benefitting from closer economic and trade links with the US, especially Mexico and Colombia, which is now largely politically stable and attracting inward investment as a result.

“Mexico and Colombia are clearly driving growth in this region, and Bogota is the rising star,” said Blondel. “Airport traffic there has increased by a factor of four over the last 15 years, as a result of significant development projects, and the airport has lofty ambitions for the future. Brazil, meanwhile, is not even in the top 10 airports for growth. The Brazilian airports have stalled, the market is flat and they are not contributing growth.”

Compared to an overall regional growth rate of 5.4%, the Central American region saw a 10.6% increase in airport traffic in 2015. The West Coast Andean states saw airport traffic increase 12.9% during the year, Argentina 4.7%, and the West Indies 5.4%. Blondel pointed out that, with the opening up of Cuba, the West Indies could expect to see higher growth in 2016.

“Latin America is a region of two halves,” he said. “Growth is linked to economic growth as well as closer trade ties with the US, and there is a contrast between the two sides of the continent.”

Asia-Pacific

China remains the largest growth driver in Asia, accounting for 42% of growth in 2015.

“China is still leading the race and has a much bigger impact than any other country in the region, but it is a little less predominant and growth is less than might have been expected,” Blondel noted. This, he said, was in line with the slowing economy in China. Most of the growth was driven by regional airports, with the big hubs—Beijing, Guangzhou, and Shanghai—slowing by comparison: just 8% growth over the last eight years and market share down from 29% to 23%, compared to 14% for the regional airports and a market share increase from 54% to 61% over the same period.

In the booming Pearl River Delta, two of the three major airports—Hong Kong and Shenzhen—grew by more than 5%, while Guangzhou unexpectedly ended 2015 with virtually stagnant growth.

India is now clearly established as the region’s second largest growth driver, doubling passenger numbers at its airports in 2015. A number of new carriers stepped in to fill the void left by the demise of Kingfisher Airlines and this boosted international traffic by 10% and domestic traffic by as much as 20%.

“Domestic traffic is picking up sharply,” Blondel said. “India’s economy is back on track, the spending power of the middle classes is increasing and stimulating demand for air travel, and the airline sector is more stable. Kingfisher is a thing of the past and several new LCCs are providing stable and affordable travel options, putting pressure on prices. In addition, India has invested in new facilities and infrastructure at a number of the country’s main airports.”

All of India’s main airports saw traffic growth at or above 10% in 2015, and although secondary cities are growing faster than the main gateways (Mumbai and Delhi), they are still relatively small.

“To put it in context, India has a population of 1.3 billion inhabitants, and is roughly the size of Western Europe, served by just two mega hub (equivalent to CDG, FRA or LHR) gateway airports,” said Blondel. “The regional cities are catching up, but still lag behind.”

Thailand remains a tourism hotspot, with most of the growth accounted for by visitors from within the region.

Japan and South Korea, both mature economies, are looking to the tourism sector to stimulate growth, particularly from within the region and especially from China.

“Tourism profiles within the Asia-Pacific region are changing as increased wealth and the proliferation of LCCs stimulate more intra-regional air travel,” Blondel said. “The region’s younger generations tend to speak English, are more open to foreign cultures, and have more access than ever before to affordable air travel; while the retired generations have very high spending power and time and are travelling for leisure more than before.”

In the Association of South East Asian Nations (ASEAN), the trend of unexpected polarities is sustained. Traffic at Indonesia’s airports is declining, Malaysia is flat, and Singapore is growing, but at a conservative pace.

Although airport and ATC capacity constraints have had a significant impact on air traffic growth in Indonesia in the past, Blondel pointed out that they cannot account for the recent sharp decline in passenger numbers at Jakarta’s airports. And while Jakarta has been particularly hit, the survey shows a downward trend across the country, suggesting that Indonesia’s poor aviation safety record may have affected foreign visitor arrivals.

“So it is not just about capacity. The regional airports are posting nice growth, perhaps at the expense of the gateways. But Indonesia’s traffic is suffering overall where it should be growing much faster,” said Blondel.

Conversely, the so-called Tiger economies of Vietnam, Thailand and the Philippines are posting sustained rates of growth.

Middle East

In 2015, Dubai continued its meteoric growth, with passenger numbers increasing more than 10%, but regional challengers Doha and Abu Dhabi each recorded growth of more than 17% or nearly twice as fast as Dubai. However, 17% growth at those airports equates to an additional 3-5 million passengers each, or a cumulative total of approximately 8 million additional passengers, which equates almost exactly to the additional passenger numbers generated by the 10% growth in Dubai alone.

Both Abu Dhabi and Doha have benefitted from the ambitious expansion strategies of their home-based airlines, as has Muscat in Oman which saw passenger numbers rise 18% in 2015. Nevertheless, Doha, Abu Dhabi, and Muscat together handled 65 million passengers in 2015, compared with Dubai’s 78 million.

Traffic in Teheran remained flat, but Blondel said Iran was expected to see more positive growth in 2016 following the removal of sanctions and the normalisation of relations between that country and the West.

Africa

The Arthur D Little report indicates there were no clear regional patterns in Africa in 2015.

South Africa showed good growth in line with its economy, but West Africa was hit by the lack of foreign investment in Nigeria and a downturn in domestic traffic there caused by civil unrest and security issues. Some of the region’s secondary airports have posted growth above 10%, but are only handling 2-3 million passengers, which does not compensate for loss of traffic in Nigeria.

In East Africa, Ethiopian Airlines has consolidated its market leadership position, leaving Kenya Airways struggling to keep pace. Ethiopian’s aggressive strategy, introduction of a new fleet, and the country’s strategy to position Addis Ababa as a key gateway to the continent have helped boost traffic levels. However, success in all those fields could mean that Addis Ababa will soon need a new airport in order to keep pace with the growth.

In North Africa, tourism-oriented airports have been badly affected by terrorist attacks in Tunisia and Egypt, which have had a knock-on effect for other countries in the region including Morocco where previously good levels of growth have now turned almost flat. Cairo is still growing, in part picking up Red Sea traffic routing via the capital due to the suspension of direct flights to the Red Sea airports. In addition, the downturn in Russia combined with the suspected terrorist downing of a Russian Metrojet aircraft over Sinai has compounded the collapse of traffic at Sharm al Sheikh, which was a favorite resort for Russian tourists. Morocco was hit by the ‘halo effect’ of mass tourism perception fears and LCCs are being “cautious with capacity there,” Blondel said.

Overall, growth in North Africa in 2015 was down to just 1%, with much of the traffic transferring to southern Europe—Portugal, Spain and Greece—which is increasingly regarded by northern European tourists as a “perfect sweetspot:” safer, cheap and more easily accessible.

“The security issue will be a long-time factor,” said Blondel. “The effect of this trend is going to last for some years.”