It is completely different from the United States. The UK characterizes airports as operating assets and positions institutions like BAA as professional airport management companies, creating maximum profits through diversified management models and effective operating methods;

Adopt a diversified management method, own part of the equity and the management rights of the entire airport, does not participate in the stake but has the management rights of the entire airport, controls the airport management company, and has part of the management rights of the entire airport.

BAA operates and manages airport security inspection, first aid, duty-free shops, some projects and maintenance, inquiries, aeronautical display systems, and provides ground services, catering, aviation fuel, some projects 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.

More work needs to be done, so naturally we have to hire more employees, and the subsequent increase in operating costs.

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

To be honest, he has Delta, so he has to think about the problem from the perspective of the airline. In front of the airport, the airline has no say.

Of course, this is just for a single entity. Out of competition and cooperation, major airlines in the world have formed various air transport alliances, forming five global air transport alliances, including Starry Sky, Oneworld, and Tianhe.

Member companies of the three famous aviation alliances account for more than 70% of the world air transport market share.

If a family has no right to speak, it will be more powerful if they join forces. These alliance companies require that they can enjoy standardized and internationalized airport services at major airports around the world. This demand is an important driving force for the integration between airports, and BAA has also grown.

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

People's travel demand is actually positively correlated with the economic level. The better the economic level, the greater the travel demand. Country Z currently has a population of 1.4 billion, and about 1 billion people have not taken a plane. This is not because everyone does not need to take a plane, but because a large number of people have no money or are reluctant to take a plane. With the continuous improvement of the domestic economy, some of these 1 billion people will become airline customers. Even if only 400 million people will need to take a plane, the airline's revenue will also double.

So if you invest in airlines or airports in Country Z, you will actually make a profit and make sure to make a profit.

But it’s different abroad. Except for Country Z, the economic levels of other countries in the world are regressing!

More than 90% of the airline's revenue comes from passenger transport services. For ordinary consumers, when purchasing air tickets, they will weigh the time and the fare. Within an acceptable time frame, try to choose the ticket with the lowest fare. As for which airline ticket to buy, everyone will care less. Of course, some rich people buy tickets all depends on their mood, which is a minority after all.

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

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

Airport revenue is mainly divided into two major parts: aviation revenue (aircraft takeoff and landing, passengers and cargo and mail) accounts for more than 40%, and non-air revenue (rental, advertising, catering, etc.) accounts for more than 50%. Among them, the aviation revenue standards are all stipulated by the state, and there is little difference.

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

Therefore, the non-air revenue of the airport is more reliable. This mainly comes from rent, catering, and advertising fees. Among them, the rental income of duty-free business accounts for a high proportion and the gross profit margin is extremely high. This is mainly because the airport area is limited and the resources are tight, resulting in high rents. The airport traffic in the core area is large, and there is a lack of strong competitors around it, so the bargaining power is stronger.

How strong is it? The area of ​​duty-free shops in Shanghai Airport is about 16,900 square meters, and the guaranteed rent is about 4.2 billion yuan, which means that the annual guaranteed rent per square meter is 248,000 yuan. Isn’t that exaggerated? But what is this? After 10 years, the rent per square meter may at least double, which is nearly 500,000 yuan. This tm is still a wholesale price, so can the airport not make money? Especially the airports in core cities!

Therefore, on the revenue side, the airport's bargaining power is very strong, while the airlines have poor bargaining power. In the future, as the passenger growth rate further declines, the competition among airlines will become more intense, and price wars will inevitably occur, let alone bargaining power. 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 have been growing steadily, their gains are limited, and their net profits are fluctuating greatly and are very unstable, and they often have a significant increase and drop sharply.

Airports are 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 in outperforming bank interest rates.

Don’t forget that in terms of risks, the risks of airports, especially core airports, are actually very low, not to mention bankruptcy. Due to the high debt ratio and many influencing factors, airlines have greater operating risks.

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

What are the airlines? Although the market value exceeds 100 billion yuan, 90% of the fixed assets are aircraft. Aircraft are actually the same as cars. After purchase, they depreciate quickly, and there is basically no possibility of appreciation, and the asset quality is poor.

Moreover, cash flow may be apart from the top airlines in the world, one of the remaining ones is counted as one, and the cash flow is very tight and the asset structure is very unreasonable.

But airports are different. They have a high proportion of projects under construction, and more than 90% of fixed assets are houses, buildings, runways and tarmacs. Although houses and runways in large airports continue to be depreciated as well, airport houses and runways may continue to appreciate, so the asset quality is very high.
Chapter completed!