Airport Operations & Concessions

# Executive Summary * The airport operations industry is experiencing a historic surge in global passenger traffic, projected to surpass pre-pandemic levels in 2025 and double by 2040, creating immense revenue opportunities but also straining existing infrastructure. * In response, operators are launching multi-billion dollar capital expenditure programs to expand capacity, making effective project execution a key competitive differentiator. * Maximizing high-margin non-aeronautical revenues (NAR) has become a critical strategic priority to improve profitability and fund investments, as operators transform airports into commercial destinations. * Significant macroeconomic headwinds, including higher interest rates, rising labor costs, and foreign exchange volatility, are creating immediate pressure on margins and reported earnings. * Leading operators are differentiating through distinct strategies, including deep geographic diversification, integration of commercial assets like industrial parks, and strategic mergers and acquisitions (M&A) into new business lines. * The industry maintains strong financial health, with robust EBITDA margins and healthy balance sheets providing the flexibility for continued investment and shareholder returns. ## Key Trends & Outlook The primary driver of the airport operations industry is the unprecedented global surge in passenger traffic, which is forecast to surpass pre-pandemic levels in 2025 and double by 2040. This surge puts immense pressure on existing airport infrastructure, creating a critical need for expansion to avoid operational bottlenecks and capture growth. This dynamic directly impacts valuations by tying future revenue growth to the successful execution of massive, multi-billion dollar capital investment programs. Leading operators are responding aggressively; for example, Grupo Aeroportuario del Pacífico (PAC) is executing a MXN 43.2 billion Master Development Plan (2025-2029) to significantly increase terminal building square meters by 54% and aircraft parking positions by 26%. Similarly, Grupo Aeroportuario del Sureste (ASR) is directing significant capital to expand its key hub in Cancun, with Terminal 1 expected to be completed in 2026 and Terminal 4 in 2028, to alleviate capacity pressures. To fund these expansions and enhance profitability, operators are intensely focused on growing high-margin non-aeronautical revenues (NAR), which already account for nearly 40% of total revenues. This involves transforming airports into commercial destinations with expanded retail and dining, as seen in Corporación América Airports S.A. (CAAP)'s construction of a new shopping mall at Brasilia Airport, expected to open in April 2026. Technology plays a key enabling role, with digital platforms and biometrics being used to streamline passenger flow and create personalized retail experiences. The Airport 4.0 market, focusing on advanced technologies for airport operations, is expected to grow from $12.95 billion in 2025 to $21.1 billion in 2029 at a CAGR of 13%. The primary opportunity lies in successfully leveraging infrastructure investments to not only accommodate more passengers but also to significantly increase the non-aeronautical revenue generated per passenger. However, the most immediate risk is margin compression from macroeconomic factors, where rising interest rates and labor costs directly threaten profitability. This threat is amplified by foreign exchange volatility, which caused ASR's net income to decline by nearly 40% in Q2 2025 due to a MXN 1.2 billion foreign exchange loss, despite revenue growth. ## Competitive Landscape The airport operations market is composed of large, publicly-traded operators managing portfolios under long-term concession agreements. Non-aeronautical revenue is highly concentrated, with 52% generated by the top 20 global airports. Within this structure, operators employ distinct competitive approaches. Some operators, like CAAP, compete through extensive geographic diversification, managing 52 airports across Latin America, Europe, and Eurasia to ensure resilience and access to diverse growth markets. This contrasts with others like Grupo Aeroportario del Centro Norte, S.A.B. de C.V. (GAERF / OMA), which focuses on dominating a specific region, central and northern Mexico, while integrating complementary businesses like hotel operations and industrial parks to capitalize on local economic trends such as near-shoring. A third approach involves strategic M&A into adjacent businesses, exemplified by ASR's pending $295 million acquisition of URW Airports, LLC, which includes retail concessions at JFK, LAX, and ORD, to accelerate its non-aeronautical revenue growth and diversify its commercial revenue streams. ## Financial Performance Revenue growth across the sector is robust but divergent, ranging from ASR's +5% year-over-year (YoY) in Q2 2025 to PAC's +30.6% YoY in the same period. This divergence is driven less by underlying passenger demand and more by company-specific exposure to regulatory tariff changes and foreign exchange fluctuations. The leaders are those benefiting from a favorable combination of both. PAC's sector-leading 30.6% revenue growth exemplifies this, directly benefiting from the implementation of new tariffs and the tailwind of a depreciating Mexican Peso. {{chart_0}} Profitability is characterized by generally strong and high EBITDA margins, but with significant vulnerability in net income due to external factors. EBITDA margins cluster in a high range of 67-75% for Mexican operators, with CAAP reporting a 38.6% Adjusted EBITDA margin in Q2 2025. High EBITDA margins are a structural feature of the concession model, reflecting significant pricing power. {{chart_1}} However, profitability at the net income level is diverging based on exposure to macroeconomic pressures. OMA's industry-leading 74.6% EBITDA margin highlights the benefit of its diversified model. In contrast, ASR's 39.9% drop in net income, despite a healthy 68% EBITDA margin, proves how quickly foreign exchange losses can erase operating profits. {{chart_2}} Operators are allocating capital to address the industry's most critical challenge: infrastructure constraints. This is driving multi-billion dollar investment programs. Confident in future cash flows, they are funding these plans while maintaining substantial dividend payments. This dual priority is clear in PAC's commitment to a MXN 43.2 billion development plan alongside its forty-first consecutive dividend payment of MXN 16.84 per share for 2025. Similarly, ASR is funding a $295 million acquisition while distributing MXN 24 billion in ordinary and extraordinary cash dividends for 2025. Across the board, operators maintain strong balance sheets, a necessity for securing favorable financing for their capital-intensive expansion projects. Years of strong cash generation have resulted in robust liquidity and low leverage ratios, providing significant financial flexibility. CAAP's reduction of its net leverage ratio to a record-low 1.0x in Q2 2025 is representative of the industry's focus on maintaining balance sheet strength to fund future growth. {{chart_3}}