A bustling airport is often a source of pride and can be a key driver of growth for local, regional and national economies. No wonder governments across the world are considering building new airports or expanding existing facilities.
Brand new hub airports are being built across Africa, Asia and the Middle East, with China completing 10 in the last year. One of the world’s busiest, London Heathrow Airport, is planning a third runway. According to Frontier Economics, it will generate close to £17.1bn per annum by 2050 (0.43% of GDP) and create 100,000 jobs.
Every additional million passengers per year creates between 500 to 1,500 direct jobs at the airport
However, a new or expanded airport doesn’t come with guarantees of economic growth. Much can go wrong, and the sector has seen some spectacular failures. But one of the main keys to success is collaboration across multiple areas of infrastructure.
Employment opportunities
An airport provides direct, indirect and induced growth. The direct impact stems from the wide variety of airport-based jobs including baggage handlers, security guards, retailers, hospitality staff and air traffic controllers. Indirect growth results from the airport supply chains – this could include hamburgers, cleaning products, retail stocks, jet fuel, spare parts for landing lights, high vis clothing. And a wider, induced impact comes from secondary spending – that is, the spending of wages on food, rents, entertainment, travelling to work, etc.
‘Research has shown that every additional million passengers per year creates between 500 to 1,500 direct jobs at the airport,’ says associate professor Richard Moxon of Cranfield University’s Centre for Air Transport Management. Airports Council International claims that for every job at an airport, there can be anywhere between three to 10 additional jobs in the wider economy.
It’s anticipated that passenger growth globally will continue at pace
Unsurprisingly, major hubs put up the biggest numbers. The world’s busiest airport, Atlanta, which saw 108 million people pass through in 2024, employs 63,000 workers. This makes it the state of Georgia’s biggest employer. It also contributed US$34bn to the economy.
Smaller airports have an impact too. ‘Marginal growth can have a relatively large impact on the local economy because it is smaller,’ says Moxon. ‘An extra 1,000 jobs around Inverness Airport in north-east Scotland will have more impact than an extra 1,000 jobs around London Heathrow, but both are equally valid as an indicator of potential direct economic impact.’
Agglomeration effects
Hub airports also give bigger agglomeration effects – that is, productivity benefits achieved by businesses being located close to each other, with ‘knowledge spill-over’ between companies, and improved access to suppliers and labour markets. ‘The airport attracts so much direct investment to support its activities that it becomes a large economic entity in its own right,’ says Moxon.
Low-cost carriers have transformed the global market, driving demand for airport investment
The ‘catalytic impact’ of an airport – the benefits that accrue through increased connectivity created by the airport – are also key. ‘This might be foreign direct investment, such as a company deciding to build a factory near an airport so senior staff and clients or customers can reach it easily,’ says Moxon. ‘Cargo business is important too, though often overlooked. It can make a lot of routes viable.
‘There’s also the impact on labour markets, as a region that has good connections can successfully attract talented individuals to live and work. These catalysts benefit the economy, but they are hard to quantify.’
Tourist lure
Of course, when many of us think about the need for an airport, we are looking at it through the lens of tourism – and this is a key driver for governments and developers.
‘Going on holiday is by far the most important area of discretionary spend in household budgets,’ explains Alistair Pritchard, lead partner for travel and aviation at Deloitte UK. ‘It’s anticipated that passenger growth globally will continue at pace, subject to the aircraft manufacturers being able to produce enough aircraft.’
You see more rapid airport development in countries that have fewer private stakeholders to align
Aircraft manufacturers Airbus and Boeing currently have a backlog of 14,849 orders for commercial airliners, but both are increasing the number of aircraft they produce. Airbus should deliver about 840 planes in 2025, but its all-time high of 863 deliveries was set in 2019, a record that has the potential to be surpassed in 2025.
Low-cost carriers such as EasyJet, Allegiant Air and Cebu Pacific have transformed the global market, driving demand for airport investment. Alongside this, the rise in popularity of cruises has driven demand for airlines and airports to enable cruisers to reach their ships’ port destinations. Pritchard explains. ‘It is an integrated ecosystem, and it requires a lot of collaboration for that to work.’
Collaboration is key
In fact, cooperation – or the removal of ‘friction’ as Pritchard describes it – is a key enabler for airports.
‘Collaboration of stakeholders is very important’, he says. ‘Around the world, you see much more rapid airport development in Africa, the Middle East and China, for example, because they often don’t have so many private stakeholders that have to align.’
In many parts of the world airports are state-owned. An example of this is the new hub Bishoftu Airport outside Addis Ababa, Ethiopia. Costing US$6bn and due to be completed in 2029, it is designed to carry 100 million passengers a year. The Chinese government also built 22 new airports in China in 2024.
With access such a serious problem, customers stayed away from Spain’s Ciudad Real Airport
In contrast, having begun consultations in 2009, London Heathrow hopes to complete its extra runway in 2035 at a cost of at least £14bn, possibly much more. And the stakeholders are far from aligned, with the Mayor of London’s office and residents fiercely opposed.
A prime example of how a lack of co-ordination and planning in airport development can bring about failure is Spain’s Ciudad Real Airport in Madrid. The European Union, unhappy with the facility’s environmental impact, had delayed its construction for four years.
It was eventually opened in 2009, but hadn’t been connected to the nearby high-speed railway as planned, forcing travellers to take a slower, two-hour train trip to Madrid city centre – or even longer by road. With access such a serious problem, customers stayed away, and in 2012 the airport declared bankruptcy.
Airport expansion does drive economic growth, but only if the project is properly integrated across all stakeholders.
