Recoveries from previous downturns in traffic on a monthly basis
Lowered estimates to reflect rising uncertainty
European airports traffic recovery so far has been weaker in comparison with past recoveries. A prolonged downturn increases the risks of structural disruption in the aviation ecosystem and shifting consumer behaviour, raising the uncertainty on the mid-term earnings power of European airports. To reflect these risks we have lowered our traffic and retail forecasts. We expect FY19 traffic to recover by FY23/FY24. The silver lining remains regulation where we see upside risks vs. expectations when regulatory frameworks are rolled-over.
Retail – MAGs, mix and consumption repatriation
Recent evidence from international airports illustrates downside risks to minimum annual guarantees (MAGs). We take a more conservative view and have cut duty free MAGs mid-term. In terms of spend per passenger we expect: i) negative mix on the back of a slow traffic recovery on intercontinental routes; ii) increasing risk for travel retail consumption repatriation in China, supported by local policy initiative (e.g. the recent Hainan duty free policy).