The cost of competitiveness: why airport economics matter more than ever

One of the most common assumptions in airport development is that growth and competitiveness naturally follow investment. Build a larger terminal. Expand capacity. Modernise infrastructure. Improve facilities. The expectation is often that connectivity, traffic and commercial performance will eventually follow.

Sometimes they do. Sometimes they do not.

Over time, I have become convinced of one thing: airports do not become competitive simply because they invest. They become competitive when investment, demand, affordability and commercial sustainability evolve together.

This distinction matters because airports do not operate in theory. They operate in markets. And markets have limits.

An airport may have a legitimate need for expansion. Passenger demand may justify additional capacity. Governments may see infrastructure as a catalyst for economic development. All of those objectives are valid. The challenge begins when investment decisions and market realities start to move at different speeds.

In many cases, expectations of traffic growth, airline interest and commercial performance have not always kept pace with market realities. Infrastructure creates opportunity, but it cannot create demand on its own.

The competitiveness paradox

One of the realities facing many African airports is that they are expected to deliver world-class infrastructure while operating in markets that remain highly price-sensitive. This creates a paradox. The airports under the greatest pressure to invest are often the same airports facing the greatest constraints in recovering those investments.

Unlike major global hubs that can spread costs across tens of millions of passengers annually, many African airports operate in smaller and more volatile markets. Traffic growth may be promising, but traffic growth alone does not pay today’s bills.

This creates a balancing act that airport executives know all too well. Invest too little, and infrastructure becomes a constraint. Invest too aggressively, and financial sustainability comes under pressure. The answer is rarely found at either extreme.

Before discussing how infrastructure should be financed or operated, airports must first ask an even more fundamental question: what infrastructure should be built in the first place? Investment decisions should not begin with construction plans alone, but with a clear understanding of long-term demand, market realities, and the economic outcomes the infrastructure is intended to support. Competitiveness begins not simply with building more, but with building what is needed.

When CAPEX becomes OPEX

Airport discussions often focus heavily on capital expenditure. New terminals. Runway upgrades. Technology investments. Expanded facilities. These projects are visible. Operating expenditure is not.

Yet every capital investment eventually becomes an operating responsibility. The terminal that looked impressive on opening day must still be cleaned, maintained, powered, secured, staffed, repaired, and upgraded years later. In many ways, the true cost of infrastructure begins after construction ends.

Traffic growth may be promising, but traffic growth alone does not pay today’s bills.

Let me be clear: this is not an argument against investment. Far from it. Africa still requires significant airport development to support future growth. The question is whether investment decisions are being matched with realistic assumptions about demand, revenue generation, and long-term operating requirements.

Because infrastructure does not only create capacity. It also creates obligations.

The affordability question

At some point, every airport encounters the same challenge: how should infrastructure be paid for?

The obvious answer is through airport charges and user fees. The practical answer is far more complicated.

Airports need revenue. Airlines need affordability. Passengers need value. Governments need development outcomes. The challenge is balancing all four.

An airport may be fully justified in seeking cost recovery. However, if the resulting charges begin to affect airline economics, route viability, or passenger demand, the consequences can become self-defeating. This is particularly important in African markets where air travel often remains expensive relative to average income levels.

This is also consistent with the principle set out in ICAO Doc 9082, Policies on Charges for Airports and Air Navigation Services, which defines a charge as ‘a levy that is designed and applied specifically to recover the costs of providing facilities and services for civil aviation’. In that sense, cost recovery is not an abstract financial preference. It is part of the policy foundation for ensuring that airports can maintain the facilities and services on which safe, reliable aviation depends.

Competitiveness, therefore, is not simply about recovering costs. It is about understanding what the market can realistically sustain. Some of the most effective airport leaders I have come across are not necessarily focused on maximising charges. They are focused on maximising long-term value.

The revenue conversation

One of the most significant shifts occurring in airport economics today is the growing importance of non-aeronautical revenue. Historically, many airports relied heavily on passenger charges, landing fees, and other aeronautical revenues. Historically, passenger charges, landing fees and other aeronautical revenues formed the backbone of airport finance. That model reflected a very different era of aviation. Today’s operating environment is far more competitive, commercial and interconnected. While aeronautical revenues remain fundamental, they were never intended to carry the full burden of long-term airport sustainability on their own.

Around the world, airports are strengthening commercial revenues through retail, food and beverage, parking, advertising, logistics, cargo, property development, hospitality, and airport city initiatives.

For many African airports, however, non-aeronautical development is constrained by scale. Lower traffic volumes tend to produce higher unit costs, and traffic growth is often the principal driver of commercial revenue potential. Liberalisation and route development therefore matter not only because they stimulate passenger demand, but because they strengthen the business case for retail, property, cargo, hospitality, and other commercial activities that improve airport viability over time.

The significance extends beyond financial performance. Every dollar generated outside traditional airport charges creates greater flexibility within them. Put differently, commercial revenue is not simply a business opportunity. It is increasingly becoming a competitiveness strategy. The most resilient airports are often those with the greatest ability to diversify their income sources.

Growth versus sustainability

For many years, airport success was often measured primarily through passenger numbers. More passengers generally meant more revenue, more connectivity, and greater economic impact.

Passenger growth remains important. But growth alone is no longer enough. The experience of recent years has reminded the industry that resilience matters just as much.

The most resilient airports are often those with the greatest ability to diversify their income sources.

A rapidly growing airport can still face financial challenges if costs rise faster than revenues. An airport can achieve impressive traffic figures while struggling to maintain commercial sustainability. Growth is valuable. Sustainable growth is far more valuable. That distinction may become increasingly important as African airports continue to invest for the future.

Looking beyond infrastructure

The conversation around airport competitiveness is changing. The first challenge was infrastructure. The next challenge is ensuring that infrastructure remains economically sustainable.

That requires difficult decisions. How much should airports invest? How quickly should they expand? How should costs be recovered? What level of charges can the market support? How can commercial revenues be strengthened?

These questions may not generate the same excitement as a new terminal or runway project. Yet they often determine whether infrastructure ultimately delivers the outcomes it was intended to achieve.

Because airports do not compete on infrastructure alone. They compete on value, efficiency, affordability and commercial resilience. Increasingly, the question is no longer simply how much airports build, but whether the infrastructure they build continues to create sustainable economic value long after construction has finished.