US$2.4 Trillion Airport Bill Meets a Volatile Demand Curve

Some US$2.4 trillion is set to flow into airport infrastructure worldwide, and Asia Pacific will absorb much of it while contributing more than half of global aviation growth over the coming decades. Mabel Kwan, Managing Director at Alton Aviation Consultancy, put those figures on the table at the Passenger Terminal Expo Asia 2026 in Singapore. After moderating a panel pointedly titled "Who will finance the future of airports in the Asia Pacific region?", she laid out where the money should come from, and where it should not.

"Asia Pacific is going to be the key region driving aviation growth, contributing to over half of the growth within the aviation industry in the next few decades," Kwan said. "So we need to think about how to finance and how to support that growth."

The financing question is complicated by the asset itself. Kwan described airports as national strategic assets whose connectivity multiplies across the wider economy. "This infrastructure tends to be long-term and fairly extensive," she explained. "It's very important that we think about how to finance it and how to make it sustainable, and not just be a white elephant."

Why does building ahead of demand fail?

Many airports in the region face the opposite problem from congestion. Governments aspire to grand facilities and build them before the traffic arrives.

"A lot of this is built ahead of the demand curve, which means there are situations where you are not fully utilizing it," Kwan said. "There'll be periods where the economics of the airport doesn't work."

Her prescription is pacing. "There's no silver bullet," she said, and the starting point is each country's connectivity strategy. Singapore sits at one extreme: aviation is a core industry, so Changi Airport Group (CAG) and the Civil Aviation Authority of Singapore (CAS) invest to stay at the forefront.

Second- and third-tier city airports are a different case. Many have not yet reached the steep part of their traffic J-curve, and their catchments are still maturing.

"It needs to be a very moderated approach, modular in the expansion," Kwan said. "COVID was one example where traffic really dissipated. You are going to see a lot more volatility in the industry, not less."

Is future-proofing actually possible?

Future-proofing, in Kwan's view, is a phrase that outruns its execution. "Future-proofing is easy to say, but it's hard to achieve because technology is changing all the time, and the trends are also changing all the time," she said.

Retail is the cautionary example. Airports have leaned hard on non-aeronautical revenue, yet rising incomes and e-commerce mean travelers increasingly spend at their destination rather than in the terminal.

She warned against designing to benchmarks. "Certain airports have 40% non-aeronautical revenue, and therefore I'm going to build a huge shopping mall in the airport," she said. "But you need to look at the catchment. You need to really contextualize it."

Will Middle East spillover traffic last?

The Middle East conflict has rerouted global traffic, and Asian hubs picked up flows that once transited the Gulf. Kwan is not building an investment case on it.

"Asia Pacific airports have benefited from some of the spillover traffic from the Middle East, especially in the immediate aftermath of what happened in Iran," she said. "But longer-term macro fundamentals have begun to creep in as well."

High oil prices are squeezing airline economics, she noted, with carriers cutting capacity on underperforming routes. After the initial uptick, traffic is settling back to long-term trends, and she expects the strong Middle Eastern carriers to claw back market share.

The lesson for governments is timing. "Infrastructure is very much a long-horizon asset class," Kwan said. "You should plan for the long term instead of these short-term spikes and troughs." Short-term swings, she added, are better handled through operational flexibility, refining processes and adjusting parameters so airports can react faster. "You can't just plan to increase capacity in the short term," she said.

What should a PPP structure start from?

Alignment between policy, capital and performance is, in Kwan's words, "sort of like a nirvana". Getting there requires a bespoke structure rather than a standard template.

"Underlying any structuring of PPP models, you need to understand the fundamental objectives of the government in going out for a PPP exercise," she said.

Some governments want expertise more than money, using PPPs to grow local talent and raise an airport to international standards; those models should attract strategic international investors who bring operating skills. Others mainly want to monetize the asset, which opens the door to a wider investor pool and structures ranging from concessions and PPPs to an IPO, with long-term stable financing prioritized over know-how.

Whatever the model, Kwan's verdict on the region's planners comes back to one word. "You need to build an airport that can adapt to changes," she said, "rather than say, 'I'm going to plan for certain technologies in the future.'"