Challenging times for airport investors: Trends in airport traffic

In the past, the aviation industry has had an expectation of almost continual uninterrupted growth, partly fuelled by the deregulation of air travel. Debt and equity investors have invested in airports with the belief that airports, thanks to their (supposed) monopolistic assets, were well protected against cycles and almost recession-proof. The recent economic crisis has shown this assumption to be false. Historically, airport investors and aviation forecasters have relied on a linkage between GDP growth and traffic growth. The recent downturn in traffic in many markets and the disconnection between GDP growth and passenger traffic growth questions whether this linkage is still meaningful and relevant. Much of recent traffic growth would appear to be unprofitable for the airlines. A lot of current traffic would seem to be built on excess capacity and created by fares that are too low. So should one be looking at lower traffic multipliers in the future, particularly for the more mature markets?