Asia Pacific Airport Financing Market - Investment Analysis and Growth Opportunities

Published by: Frost & Sullivan

Published: Feb. 26, 2007

Table of Contents

1. Executive Summary

1. Executive Summary

1. Executive Summary

2. Introduction and Methodology

1. Introduction

1. Introduction

2. Methodology

3. Industry Fundamentals and Growth Opportunities

1. Market Overview and Investment Analysis

1. Introduction

2. Market Overview

3. Investment Themes

4. Investment Themes (Contd...)

2. Geographical Analysis

1. India

2. China

3. Australia

4. Japan

5. New Zealand

6. Thailand

7. Indonesia

8. Singapore

9. South Korea

10. Philippines

3. Segment Analysis

1. Segment Analysis

4. Industry Fundamentals and Growth Opportunities

1. Industry Economics

2. Value Chain Analysis

3. Frost & Sullivan Sector Scorecard

4. Frost & Sullivan Growth Monitor

4. Financial Benchmarking Analysis

1. Industry Profitability

1. Year-Over-Year Revenue Growth

2. Operating Profit Margin

3. Long-Term Debt to Equity Ratio

4. Airlines Traffic Trend Analysis

5. Aeronautical Revenue Vs Non Aeronautical Revenues

2. Valuation

1. Historical and Current Mergers and Acquisitions (M&A) Valuation

2. Private Equity (PE)/Venture Capital (VC) Activity

3. 2006 Twelve Months Stock Performance

Abstract

The Frost & Sullivan research service titled Asia Pacific Airport Financing: Investment Analysis and Growth Opportunities provides the three main investment themes, industry economics, value chain analysis, growth monitor, private equity, mergers and acquisitions and venture capital activity. In this research service, Frost & Sullivan's expert analysts thoroughly examine the markets for new airports and expansion/modification.

Market Overview

Governments in the Asia Pacific Region looking to Fast Track Privatization

The Asia Pacific airport financing market is moving to a growth phase with regional governments realizing the increasing need to both build world class airports and upgrade the existing ones to international standards. This is being necessitated by the boom in the passenger and cargo traffic in most of the countries in the Asia Pacific region, as well as the constantly changing airport security regulations that demand upgraded security systems in line with international standards. In a significant move to cash in on the booming aviation industry, governments in the region are looking to fast track privatization, in a bid to meet the high amounts of financing required to fund new airport constructions and upgrade existing facilities.

Acknowledging the vast opportunities in the Asia Pacific airport financing market, especially considering that only a handful of airports are privatized, most foreign investors are at present looking to enter the market. High capital expenditure has not deterred venture capital investors such as Siemens Venture Capital to invest in the Bangalore International Airport Limited (BIAL) Greenfield project, and many more have already begun participating in the bidding process for airports in India, China, Indonesia, South Korea, Australia, and New Zealand. "In terms of investments in commercial activities at airports, there is still room for substantial gains as these activities generate the maximum revenues and are also less regulated by the airport authorities," notes the analyst of this research service. "The model of British Airport Authority (BAA), focusing on non aeronautical revenues, is likely to be followed by most of the airport and private investors."

Immense Market Potential in India and China

Among individual countries, China along with India holds considerable potential for investors. One hundred and eight new airports are to be constructed in China between 2006 and 2010, and the decision of the Chinese Government to stop providing subsidies to domestic airports by 2005 and to allow private investors to build, buy, or manage airports makes for considerable potential. The total cost expected to be incurred for the construction of new airports alone is $13.3 billion (110 billion Yuan). In India, the success of low cost carriers (LCCs) has changed the countries aviation profile as well as the outlook of both the government and the Airports Authority of India (AAI) toward airports. Eight more airports are likely to be built in the country by 2010, in addition to the 94 airports that exist at present. Existing airports by themselves promise opportunities as none of these airports meet the latest international quality standards.

Overall, the Asia Pacific airport financing market is positioned to grow and sustain its profitability for the next five years, largely due to the aviation boom arising from the growth of LCCs and the recent initiatives of various regional governments to increase private participation. "Recent analysis shows that by 2015, between $150 billion and $200 billion is likely to be invested in airports globally, out of which 40 to 45 percent would be invested in airports across the Asia Pacific region," says the analyst. "The above figures are in line with the compound annual growth rate (CAGR) of 4.0 percent for the air travel industry in the long term, with some 4.6 billion people predicted to travel by air by 2020.

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