GAD Americas: The Markets Leading the Traffic Rebound
by Kevin Rozario (London, United Kingdom)
The return of GAD Americas in San Juan, Puerto Rico at the end of May was the perfect opportunity to look back and learn lessons – and, more importantly, to look forward. So what can we expect in the Americas versus other parts of the world in terms of the traffic trend?
There was plenty to talk about at Global Airport Development Americas (GAD Americas) this year as aviation industry leaders and investors gathered after the COVID-induced hiatus to discuss everything from board-level strategy for airport operators, to managing the commercial and financial challenges facing airport stakeholders in 2022.
The event was held from May 24-26 in San Juan, Puerto Rico and it attracted a full range of strategic advisors, technical experts, financiers, governments and, of course, airport operators.
In this opening piece*, we look at the outlook for airport traffic recovery in the Americas versus the rest of the world, leaning on an information-packed presentation from Seth Lehman, Head of North America Transportation Infrastructure at Fitch Ratings.
Traffic rebounds have been strongest in the Americas so far (Data source: Fitch Ratings).
In the agency's spring update on airport recovery it was clear that, among a selection of 12 leading nation's, the front runners in the race were all from the Americas. Indexing January 2020 as 100, the markets that had come closest to that line by December 2021 were Mexico, Colombia and the United States (see chart above).
Within the region, the weakest markets were Canada and Brazil, based on traffic tracking. However with relaxations to travel rules and mask wearing being implemented at speed across the world this year, the trends for full recoveries, ie back to 2019 levels, may be somewhat surprising.
Who Will Bounce Back First?
For example, despite China's latest outbreaks of COVID19, Fitch expects the market to be back to form by the first quarter of 2023. Meanwhile Brazil – currently a laggard – is forecasted to be at 2019 levels by the fourth quarter of next year and it is the only other country to make a full recovery by the end of 2023 according to the Fitch data.
The following year should see the US, Colombia, India and Australia – which has been one of the most cautious countries during the pandemic – back to their 2019 form. Whereas European countries, all highly dependent on international routes, are not likely to make full recoveries until 2025, or even 2026 in the case of Italy.
China and Brazil will lead the recovery race in 2023 with European markets trailing by two years (Data source: Fitch Ratings).
Recovery at 75% by Year End
A summary of the takeaways from the Fitch Ratings presentation include:
Full recoveries ranging from early 2023 to 2026
The Omicron wave has not markedly shifted views on recovery
The Russia-Ukraine conflict and air travel ban are not showing much effect
Despite the opening up of travel this year, there have been minimal revisions from late 2021 in the forecasts.
Lehman also pointed out that the Fitch data show that the overall recovery at end of 2021 was 68% and would move to around 75% by the end of this year. And as the pace-making countries above indicate, it is large, domestic-focused markets that will continue to lead the rebound.
Fitch says that future virus waves are expected to be "less impactful" to recovery forecasts but that factors that still needed to be watched for were vaccination rates; individual market's stage of development and passenger's propensity to fly; the stall that may yet come due to local inflation and rising fuel prices, as geopolitics remain highly unstable.
* This is the first of several review pieces that AirportIR will be running as the official industry news partner for GAD Americas in 2022.
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