Airports in Asia face new challenges

Airports in Asia face new challenges

HONG KONG (AFP): Airports in Asia are facing new challenges as they enjoy a boom following the downturn caused by the 1997 financial crisis, according to a report received Friday.

"A clear understanding of the financial health of airports is more crucial than ever" amid the growing demand, the international rating agency Standard and Poor's said in a report on Asia's airport industry.

New or planned airports in Hong Kong, Kuala Lumpur, Bangkok and Seoul were all targeting increased hub traffic, a market that Singapore has so far specialized in handling, said Thomas Doud, an infrastructure analyst with Standard and Poor's, in a statement.

And they were increasingly in competition with new or enhanced airports in Shanghai, Beijing, Guangzhou, Taipei and Macau while still others were on the drawing board in Japan, he added.

"This wave of airport expansion is threatening to bring about over-capacity, and enhanced competition for the business of passengers and cargo airlines," he said.

In a marked change from past experiences, investment is increasingly being provided by private sector funds, while the provision of airport services is growing increasing competitive and dynamic, the report said.

"Analyzing credit quality of Asian airports is no longer straightforward. No longer can we assume a similar credit profile as the airport's traditional government owner," Doud said.

"Governments have often introduced, or are preparing to introduce, private capital," he said, "Few of the remaining wholly government-owned airports enjoy government guarantees."

"This reduction of government credit support is happening at a time of high investment in competing facilities," said Doud.