Airport business resilience: Plan for uncertainty and prepare for change

Abstract

In recent years, there has been sustained turbulence in markets around the world. Economies are emerging from recession, but the pace of recovery is mixed while geopolitical uncertainty and security threats appear to be increasing. In a connected world, problems rarely remain geographically isolated, which means there is continued economic uncertainty in many major global markets. However, uncertainty is not always negative. The pace of technological change is rapid; the influence of mobile and digital platforms extends across all areas of business, including aviation. While such developments are generally positive, change itself creates uncertainty and new technology can be a disruptive influence. Airport managers and investors must balance the drive toward commercial optimisation against the inherent investment risk in realising new opportunities; these challenges are magnified in a market that has a more uncertain and variable outlook. Airport business models are adapting to this new reality, and there is increased recognition of the need for flexibility, creativity, and vigilance in planning, building, managing, and financing airports. The most effective counterbalance to future uncertainty is to develop business models that are resilient, but not resistant, to change. In this context, business resilience means managing risk and capitalising on opportunity. It involves preparing and organising for change, and being ready to change direction when unexpected events occur, or the operating environment changes. It is adopting a mind-set of surprises being the ‘new normal’, and realising that it’s not a question of ‘if ’ the unexpected will happen, but rather ‘when will it happen?’, ‘what will happen?’, and ‘are we prepared?’. Resilience, then, is strength with flexibility, and focus with situational awareness. Many airport operators are adapting to this new normal and recognising the need for greater flexibility, creativity, global awareness, and social awareness in the management of airports. While there are limitations to flexibility in an infrastructure-intensive business, this paper considers some of the measures that can be taken to optimise airport financial performance in a dynamic market where rapid change has the potential to disrupt existing business models.