Ruth Haines
Airports are complex infrastructure assets that can be appealing investments, but buying one is not as simple as strolling into an airport and making an offer. While it may be possible to invest in airports through funds that hold unlisted infrastructure assets, actually purchasing an airport comes with a unique set of challenges. Airports are subject to strict regulations, and their operations are intertwined with those of airlines and other aviation businesses. Furthermore, the attractiveness of investing in an airport depends on various factors, including the airport's concession life, the predictability of cash flow, and the potential for long-term financing. Additionally, there are social and environmental considerations, such as noise pollution and health risks, that can impact the surrounding communities and influence the airport's relationship with its neighbours.
| Characteristics | Values |
|---|---|
| Can I buy an airport? | Yes, but there are challenges. You can invest in airports through funds that partner with unlisted infrastructure managers. |
| How do I buy an airport? | By investing in a fund that owns airports, such as Invest Unlisted. |
| Where can I buy an airport? | Australia is mentioned as a country where individuals can invest in airports. |
| What are the benefits of owning an airport? | Strong visibility, predictability of cash flow streams, and high conviction of underlying cash yield. |
| What are the drawbacks of owning an airport? | Noise pollution, health concerns, and environmental pollution. |
| Can I buy confiscated items at an airport? | Yes, confiscated items are often sold at state surplus auctions or through government-operated surplus centers. |
| Can I buy plane tickets at an airport? | Yes, most airports have ticket counters or designated areas where you can purchase tickets directly from the airline or their authorized agents. |
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What You'll Learn
Buying plane tickets at the airport
While it is possible to buy plane tickets at the airport, it is important to consider the advantages and disadvantages of doing so.
One of the main advantages of buying plane tickets at the airport is the potential cost savings. Some travellers have reported saving money by purchasing tickets at the airport instead of online. This is because certain airlines, such as Spirit, Frontier, Breeze, and Allegiant, add "passenger usage fees" or "technology development charges" when booking online. These fees can be avoided by buying tickets in person at the airport. However, it is important to note that not all airlines offer discounts for buying tickets in person, and some may not even have a physical ticket counter at the airport.
Another advantage of buying tickets at the airport is the ability to compare and purchase tickets from multiple airlines in one place. This can be especially useful if you are flexible with your travel plans and are looking for the best deal.
On the other hand, there are also some disadvantages to consider when buying plane tickets at the airport. One of the main disadvantages is the uncertainty of availability. When buying tickets at the last minute, there is a risk that the flight could be fully booked, leaving you without a seat. Additionally, the time and cost of travelling to the airport should also be factored in when considering buying tickets in person.
Furthermore, it is worth noting that buying tickets at the airport may not always result in significant savings. In some cases, the savings may only be as little as $10-15 per ticket, which may not outweigh the costs of travelling to the airport.
Overall, buying plane tickets at the airport can be a viable option, especially for travellers looking for flexibility and potential cost savings. However, it is important to weigh the advantages against the disadvantages before making a decision.
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Investing in airports
One way to invest in airports is through funds that hold unlisted infrastructure assets. These funds, managed by experienced professionals, provide access to specific airports or a portfolio of airports. For example, Invest Unlisted, a fund manager co-founded by Jonathan van Rooyen, includes six Australian capital city airports in its portfolio. Such funds allow investors to gain exposure to the aviation industry without directly purchasing an airport.
Another option for investing in airports is through publicly listed dual-till airports. In this model, aeronautical activities are subject to price controls to ensure fair pricing for passengers. At the same time, the commercial segment can earn a higher rate of return, making these airports attractive investments. Examples of dual-till airports that are publicly listed include Sydney, Auckland, Zurich, Frankfurt, Copenhagen, and Paris.
Additionally, governments play a significant role in airport investments through infrastructure grants and funding programs. For instance, the US Federal Aviation Administration (FAA) has awarded hundreds of millions of dollars to airports across the country through President Biden's Bipartisan Infrastructure Law. These grants are used for terminal expansions, baggage system upgrades, runway enhancements, and air traffic infrastructure improvements, contributing to safer and more efficient travel.
When considering investing in airports, it is essential to evaluate the risks and potential returns. While the risk of major adverse events, such as weather catastrophes, pandemics, airline crashes, and terrorism, is relatively low, they are still acknowledged as real threats. Airports also require significant capital investment and expansion to accommodate growing passenger numbers. However, airports can typically increase their charges to recover a fair return on capital expenditure, providing a reliable return on investment.
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Pros and cons of living near an airport
While it is not possible to stroll into an airport and buy it outright, there are ways to invest in airports, such as through unlisted infrastructure funds. These funds allow investors to buy into a portfolio of unlisted infrastructure assets, including airports.
Now, onto the pros and cons of living near an airport:
Pros
Living near an airport can be convenient, especially for frequent travellers, as it reduces travel time to the airport. Some people may also find it exciting to watch planes take off and land from their homes.
Cons
The main disadvantage of living near an airport is the constant noise of aircraft taking off and landing, which can have significant effects on physical and mental health. Exposure to high levels of noise can lead to sleep disturbances, increased stress levels, hearing loss, and cardiovascular issues. The risk of developing hypertension is 34% higher for people residing near airports, especially when exposed to night-time noise.
Another concern is air pollution, as airports are significant sources of harmful emissions. Aircraft emissions contain ultrafine particles (UFPs) that can penetrate deep into the lungs and even enter the bloodstream. Exposure to UFPs has been linked to respiratory issues, cardiovascular disease, and dementia. Small planes use leaded fuel, contaminating the soil and air, and leading to higher lead levels in children, causing developmental delays and learning difficulties.
Additionally, your driveway may become a park-and-ride for travelling friends and family!
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Buying confiscated items from the airport
While it is possible to buy items confiscated by the TSA, the process is not as straightforward as one might think. The TSA does not profit from the sale of confiscated items. Instead, all confiscated items are transferred to the government's custody, and it is up to the government to decide where to auction these items and what to do with the profits. The state government is responsible for every item the TSA confiscates, and it determines which auction site to use. Two of the government's most frequent auction sites are eBay and GovDeals, which offer a wide range of unique and bizarre products.
The category of the confiscated item also determines its fate. Items like toiletries and liquids are usually trashed, while other solid items like power tools, knives, multitools, and scissors are put up for auction. Consumable items like food and alcohol are either trashed or consumed immediately, with most alcohol being dumped. However, valuable household items are rarely discarded and are instead stored for an unspecified period before being handed over to the state government.
It is important to note that airport theft is a concern, and items may be stolen by other passengers or airport staff. In some cases, items may be sold illegally as stolen property, and it can be challenging to track down stolen items due to their quick movement across borders.
If you are interested in purchasing confiscated items, you can participate in surplus sales held by the state. These sales are a great opportunity to acquire unique items at affordable prices. However, it is essential to do your research and be aware of the TSA's policies and rules to avoid any unnecessary embarrassment or confiscation of valuable items when travelling.
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Buying an airport: challenges and regulations
While it is possible to buy an airport, there are several challenges and legal regulations to consider. Firstly, let's discuss the challenges associated with airport acquisition.
Challenges
One of the main challenges is finding the right investment opportunity. Airports are typically owned by governments or large corporations, and they don't frequently come up for sale. Additionally, due to the specialised nature of airport infrastructure, it can be difficult to find the right partners and managers with experience in this field. As Jonathan van Rooyen, co-founder of Invest Unlisted, an unlisted infrastructure fund manager, notes, it is crucial to partner with "capable, well-resourced global managers with transparent and observable funding investing structures".
Regulations
When it comes to regulations, these can vary depending on the country and the specific airport. In some cases, airports may be subject to noise and pollution restrictions, especially if they are located near residential areas. For example, zoning regulations near some airports might restrict residential buildings, schools, and childcare centres due to noise concerns. Health risks associated with airport noise and pollution are also important factors to consider, as they can impact the surrounding community.
Investment Options
If you are interested in investing in airports, one option is to explore unlisted infrastructure funds, which provide exposure to these types of assets. These funds often have experienced managers who can identify investable structures and assets within the airport space. However, as Van Rooyen points out, there are only a finite number of these "best practice" managers, and they typically work with wholesale investors.
In summary, while buying an airport is possible, it comes with a unique set of challenges and legal considerations. It is important to thoroughly research the opportunities available and ensure compliance with any relevant regulations to ensure a successful acquisition.
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Frequently asked questions
It is possible to invest in airports, but you cannot stroll into an airport and buy a chunk of it. You can invest in airports through funds that have access to unlisted infrastructure assets.
The pros of buying a house near an airport include convenience for frequent travellers and easy access to public transportation lines. The cons include noise pollution, health risks, and particle-matter pollution.
Yes, you can buy plane tickets at the airport. Most airports have ticket counters or designated areas where you can purchase tickets directly from the airline or their authorized agents.
The Transportation Security Administration (TSA) does not profit from confiscated items. However, other government agencies can sell confiscated items through government-operated surplus centres or state surplus auctions.
Airports hold auctions where buyers can bid for unclaimed luggage.
