Chapter 2020 The Airport Is Guaranteed to Make Profits without Losing Money

Completely different from the United States, the United Kingdom defines airports as operating assets and positions organizations like BAA as professional airport management companies that create maximum profits through diversified management models and effective operating methods;

Adopting a diversified management approach, it owns part of the equity and the operation and management rights of the entire airport, does not participate in the equity but owns the operation and management rights of the entire airport, controls the airport management company, and owns part of the operation and management rights, etc.

BAA operates and manages airport security, first aid, duty-free shops, some engineering and maintenance, inquiry, and aviation display systems, and outsources ground services, catering, aviation fuel, some engineering and maintenance, retail, parking lots, and catering.

Provide equipment and facilities for air traffic control systems, public security, border defense, customs and other public functions.

If there is more work to be done, more employees will naturally be hired, followed by an increase in operating costs.

That's why Yang Cheng has to consider whether to invest in BAA.

To be honest, he owns Delta Airlines, so he has to think more from the perspective of the airline. In front of the airport, the airline company actually does not have a big say.

Of course, this is only for a single individual. Due to the market development strategy of competition and cooperation, currently the world's major airlines have formed various air transport alliances, forming five major global airlines such as Star Sky, Oneworld, and SkyTeam. Transport Industry Alliance.

The member companies of the three famous aviation alliances account for more than 70% of the world's air transport market share.

One company does not have the right to speak, but together they have a greater say. These alliance companies require standardized and international airport services at major airports around the world. This demand is an important driving force for the integration of airports, and BAA has therefore grow.

Following the trend, BAA has stronger bargaining power. From an investment perspective, it seems that the potential returns from investing in airports are greater and more stable than investing in airlines.

People's travel demand is actually positively related to the economic level. The better the economic level, the greater people's travel demand. Country Z currently has a population of 1.4 billion, and about 1 billion people have not flown. This is not because everyone does not need to fly. Airplanes, but because a large number of people have no money or are reluctant to fly. With the continuous improvement of the domestic economy, some of these 1 billion people will become customers of airlines. Even if only 400 million people will need to fly, what will happen to airlines? Income will also be doubled.

Therefore, if you invest in an airline or airport in country Z, it is actually a guaranteed profit without losing money.

But it is different abroad. Except for country Z, the economic level of other countries in the world is regressing!

More than 90% of airline revenue comes from passenger services.

For ordinary consumers, when purchasing air tickets, they will weigh time and fare. Within an acceptable time range, try to choose the air ticket with the lowest fare. As for which airline to buy, everyone is concerned about it. There will be relatively few. Of course, there are some rich people who buy tickets based on their mood. After all, they are a minority.

Take the air ticket from Shanghai to Beijing as an example. The cheapest air ticket for the whole day in summer is 452 yuan, and the highest price is 1,490 yuan. There is a price difference of about 1,000 yuan. For passengers, they will definitely choose according to their own time. Choose the cheapest and most cost-effective air ticket. If the final price and time are not much different, you will choose the airline with better service.

Therefore, the stickiness between consumers and airlines is actually very poor. When safety is similar, the brand value of airlines is relatively low and their bargaining power is poor. This principle applies to the world.

The airport's revenue is mainly divided into two parts. Aviation revenue (aircraft takeoffs and landings, passengers, cargo and mail) accounts for more than 40%, and non-aeronautical revenue (rent, advertising, catering, etc.) accounts for more than 50%. Among them, aviation revenue Sexual income standards are all set by the state and there is not much difference.

However, due to the large initial investment and high depreciation expenses of the airport, the gross profit margin of this business is also relatively low. The core airport has a high proportion of international passengers and the gross profit margin is relatively high. Airports with less passenger flow may still lose money.

Therefore, the airport's non-aeronautical income is more reliable. This aspect mainly comes from rent, catering, and advertising fees. Among them, the rental income from the duty-free business accounts for a relatively high proportion, and the gross profit margin is extremely high. This is mainly because the airport area is limited and resources are tight. As a result, rents are higher, airport passenger traffic in core areas is large, and there are no strong competitors in the surrounding areas, so bargaining power is stronger.

How strong is it? The Shanghai Airport Duty Free Shop covers an area of ​​about 16,900 square meters, and the guaranteed rent is about 4.2 billion, which means the guaranteed rent per square meter per year is 248,000. Is it an exaggeration? But this is nothing. In 10 years, the rent per square meter may at least double, which is nearly 500,000. This is still the wholesale price, so can the airport not make money? Especially airports in core cities!

Therefore, on the revenue side, the bargaining power of airports is very strong, while the bargaining power of airlines is poor. As the passenger growth rate further declines in the future, competition among airlines will become more intense, and price wars will inevitably occur, let alone price wars. What kind of bargaining power does it have, and the bargaining power of core airports will be stronger because the overall passenger flow of the airport is increasing.

In terms of revenue, although large airlines such as Delta Air Lines are growing steadily, the increase is limited, and net profits fluctuate greatly and are very unstable, often experiencing sharp growth and sharp declines.

The airport is different. Although it is difficult to experience explosive growth, the growth rate is extremely stable and the profit margin is good. Anyway, there is no problem at all in beating bank interest rates.

Don’t forget, in terms of risk, the risk of airports, especially core airports, is actually very low, let alone bankruptcy. Airlines, on the other hand, have higher operating risks due to their high debt ratio and many influencing factors.

This business risk can also be seen as the ability to resist risks. To put it bluntly, it depends on the quality of your fixed assets.

What does the airline have? Even though the market value is in the hundreds of billions, 90% of fixed assets are airplanes. Aircrafts are actually like cars. They depreciate quickly after purchase, and there is basically no possibility of appreciation. The asset quality is poor.

Moreover, except for the top few major airlines in the world, the cash flow may be very tight for all the remaining airlines, and the asset structure is very unreasonable.

But the airport is different. It has a high proportion of projects under construction, and more than 90% of the fixed assets are buildings, runways and aprons. Although the buildings, buildings and runways of large airports continue to be depreciated, the airport buildings Property and runway are likely to continue to appreciate in value, so asset quality is very high.

The key is that the cash flow is very stable and large-scale cash losses rarely occur. This is the confidence!

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