Sentence | Moda
The recent performance of the airport industry's bigwig, Capital Airport (00694), is a bit of a surprise.
To be precise, the performance in the past few years has been unsatisfactory.
The epidemic has hit China's civil aviation industry hard every three years, and the airport industry, which is accompanied by it, has naturally suffered.
However, Capital Airport, which once ranked second in the world and second only to Atlanta Airport in the United States, has not only suffered an unprecedented impact, but also become the loss king among all airports - with a cumulative net loss of 7.7 billion yuan in the three years from 2020 to 2022.
What's even more surprising is that since last year, with the rapid recovery of the civil aviation industry, the performance of various airlines and airports has shown a significant upward trend, but the capital airport is still declining.
On March 1, Capital Airport announced that it is expected to have an annual net loss of about 1.65 billion yuan to 1.75 billion yuan in 2023. Although the capital airport has achieved a loss reduction, the loss of more than 1.5 billion yuan can only be described as a "dismal operation".
On the other hand, Shanghai Airport (600009. SH), the 2023 financial report shows that the company achieved operating income of 11.047 billion yuan, a year-on-year increase of 1.02 times, and the net profit attributable to the parent company was 934 million yuan, a year-on-year turnaround;
Baiyun Airport (600004. SH) 2023 performance forecast shows that it is expected to achieve a net profit attributable to the parent company of 438 million yuan to 536 million yuan, and a net profit attributable to the parent company after deducting non-recurring gains and losses of 376 million yuan to 474 million yuan, which will also turn losses into profits.
This means that among the three major airports, Capital Airport has become the only listed airport that has lost money.
So, the worst time has passed, peers are ushering in the recovery time, why is the capital airport, known as the "first national gate", still mired in losses?
1. One step is slow and one step is slow
Why have the first two started to make money, while the capital airport is still losing money, and it has lost a lot?
The answer is actually hidden in the announcement of the capital airport.
For the loss, the Capital Airport gave this explanation:
In 2023, with the continuous recovery of the civil aviation industry, the aviation business and non-aviation business of Beijing Capital Airport will resume growth, but due to the fact that international routes have not yet fully recovered, and the impact of Beijing Daxing Airport's transfer and diversion, the company will continue to operate under greater pressure, so the company's operating performance in 2023 will still achieve losses.
In other words, the reason for the loss of the capital airport is affected by the diversion of Daxing Airport and the slow recovery of the international civil aviation market.
However, on closer inspection, this explanation does not hold water.
Judging from the recovery of international routes, after the epidemic is released, 2023 has experienced a process from initial recovery to gradual on-track.
However, the recovery of the international aviation market at the capital airport has only increased from 10% to 50%, which is obviously still a little slow compared with the overall recovery speed of the industry.
Compared with the two major airports of Shanghai Pudong and Hongqiao, their international navigation points have recovered to 73% of 2019 levels in 2023, which is significantly higher than that of the capital airport.
In other words, when everyone is on the same page, the Capital Airport is the slowest to run.
Not only that, "one city, two airports", that is, two airports in one city, have also been used as shields by the capital airport.
Objectively speaking, the diversion impact of Beijing Daxing International Airport on the capital airport should not be underestimated, but it is not a decisive factor leading to losses.
In 2023, the passenger throughput of the capital airport reached 52.97 million passengers, and although this figure has recovered to about half of 2019, it only ranks third in the national airport rankings.
On the other hand, the passenger throughput of Daxing Airport reached 39.41 million passengers, and on the surface, the competition between the two airports has caused a certain diversion effect.
But in fact, even if Daxing Airport is excluded, the passenger throughput of more than 50 million at the Capital Airport is very large.
Shenzhen Bao'an Airport (52.73 million), Xiamen Airport (24.1 million), and Hainan Airport (25.45 million) are far inferior to the capital airport in terms of passenger throughput, but these large airports have all turned losses into profits.
The capital airport, which was once far ahead, was overtaken by latecomers.
If the capital airport is "slow" in the recovery of international routes, then the capital airport, which is obviously higher than other airports in terms of passenger throughput, is "slow step".
In the face of the performance of the Capital Airport, the brokerages who were extremely optimistic about the civil aviation industry have long been unable to sit still:
During the third quarter of last year, CICC expressed its disappointment and lowered the target price of the Capital Airport from HK$5.3 to HK$4.3, while BofA Securities lowered the target price of the Capital Airport from HK$4.5 to HK$4, maintaining the rating of "underperforming".
As of April 11, before the opening of the market, the share price of Capital Airport was only HK$2.56 per share. The market capitalization is only 11.723 billion.
2. Airport business is easy, but it is difficult to do a good job at the airport
Unlike the civil aviation industry, the business model of airports is not complicated.
Generally speaking, listed airport companies will release three operational data: passenger throughput, aircraft takeoffs and landings and cargo and mail throughput, of which the core data is passenger throughput.
For an airport, the most important thing is people. Because the essence of the airport business model is to become a distribution center for more passengers, have more passenger throughput, and thus obtain profits.
In this process, the airport company's main revenue can be summarized as the sum of aviation revenue and non-aviation revenue.
Aviation business mainly refers to the take-off and landing fees, passenger bridge tolls and parking fees charged by airlines for the use of airports, and the service fees for passengers carried by airlines, including security checks and consignment fees.
Non-aeronautical business refers to the additional services provided to passengers to generate revenue, including airport retail, advertising, food and beverage services, VIP services, ground services, parking services, etc.
The special feature is that the aviation business is priced by the government.
For example, in 2008, the Civil Aviation Administration of China issued the Notice on Printing and Distributing the Implementation Plan for the Reform of Civil Airport Charges, which clearly marked the price of service fees for aviation services, and required that they should only be lowered and not raised. At the same time, the charging standards of mainland airlines are different from those of foreign airlines, and the charging price of domestic airlines is about 60% of that of foreign airlines. The price has only been adjusted twice in ten years.
On the other hand, the non-aeronautical business is market-oriented.
For any airport, aviation business is the first curve, and non-aviation business is the second curve. Aviation business tests whether a company's management ability is extreme, and non-aviation business is an important indicator to evaluate the strength of an airport's operation.
Back to the Capital Airport, that is to say, behind the four consecutive years of losses is actually the weakness of management and operational capabilities.
As we all know, the development of the Capital Airport is closely related to the development of the international status of China and Beijing, and it is precisely because of its natural monopoly position that it has eaten the dividends of the times.
But the epidemic is like a double-edged sword, it is both an exam paper and an answer sheet. The problems of the capital airport are directly exposed.
For example, in terms of positioning, the Capital Airport is an important composite hub serving the core of the capital and the Asia-Pacific region, and Daxing Airport is a comprehensive transportation hub supporting the construction of the Beijing-Tianjin Wing of the Xiong'an New Area.
But it's hard to imagine that a capital airport positioned as an international hub is the slowest of the three international airports in terms of the overall recovery of the international aviation market.
At the same time, in recent years, building non-aviation business and increasing the proportion of the "second curve" has become one of the important directions of many large airports.
Among them, the airport duty-free business is the core of the entire non-aviation business.
Taking Shanghai Airport as an example, it has achieved two major breakthroughs in 2023:
The first is to complete the establishment of Shanghai Shangmian and Hong Kong Shangmian in the tax-free business, and acquire 12.48% of the shares of Sunrise Internet and 32.00% of the issued shares of Uni-Champion, an overseas company. This move can integrate the synergistic development of the Beijing-Shanghai 4 airports and online duty-free business.
The other is to continue to adopt the "minimum guarantee and actual sales, take high model" in the duty-free agreement, in short, through the optimization of deduction points, to create a flexible airport duty-free format that can stimulate subjective initiative.
This proved to be very effective.
In 2023, Shanghai Airport's non-aeronautical revenue (including commercial catering, logistics services and other non-aeronautical revenue) will be about 6.671 billion yuan, a year-on-year increase of 82.34%, accounting for more than 60%. Among them, the tax-free business income was 1.788 billion yuan, and the tax-free contract income was 363 million yuan in the same period last year, a year-on-year increase of nearly 4 times.
Source: Shanghai Airport's 2023 financial report
To a certain extent, the reason why Shanghai Airport and Baiyun Airport were able to turn losses into profits in just one year is due to the intensive cultivation of duty-free business.
On the other hand, the Capital Airport has seen little strategic action on how to improve the profitability of non-aviation business, let alone make efforts in duty-free business.
Therefore, the loss of the capital airport seems unexpected, but it is actually reasonable.
3. Can we step on the "flywheel" of certainty and growth?
In the past year, in the civil aviation market, the domestic market has recovered rapidly, and it is a fact that the recovery speed of international routes is slightly lower than market expectations.
However, this does not mean that international routes will remain sluggish.
Air China (601111. SH) as an example, in 2023, the group will achieve operating income of 141.100 billion yuan, a year-on-year increase of 166.74%. The net loss attributable to shareholders of the parent company was 1.046 billion yuan, compared with a net loss of 38.619 billion yuan in the same period last year, and the net loss narrowed significantly.
Source: Air China's 2023 financial report
Another example is that the "three major central enterprise airlines" Air China, China Eastern Airlines, and China Southern Airlines will have a total operating income of 414.77 billion yuan in 2023, and a total net loss attributable to the parent company will be 13.423 billion yuan, which has been significantly reduced. This year, the company plans to vigorously resume international flight operations.
The Beijing-Tianjin-Hebei Metropolitan Economic Circle, where the Capital Airport is located, is located in the core and important areas of the Bohai Rim region and Northeast Asia, and is an important link in building a first-class international metropolis in Beijing, with obvious political status.
In addition, according to the Civil Aviation Administration of China (CAAC) issued in December 2018 the "Beijing Daxing International Airport Transfer and Operation and "One City, Two Flights" Flight Schedule Resource Allocation Plan:
According to the goals set in the plan, Daxing Airport will achieve the construction and operation goals of 45 million and 72 million passengers in 2021 and 2025 respectively, and Beijing Capital Airport will achieve the goal of 82 million passengers through the "quality and efficiency improvement" transformation plan from 2020 to 2025.
In other words, whether it is from the country's strategy, policy, positioning, or its own hardware facilities, the capital airport will continue to benefit passively.
However, from the initiative point of view, there is still some uncertainty about whether the capital airport can catch this "pouring wealth".
On the one hand, compared with point-to-point airports, as a hub airport, the number of transit passengers is relatively high, and the average consumption of transit passengers at the airport is also higher than that of point-to-point passengers.
In the context of the expected increase in high-net-worth passenger flow, how to turn the trend into an advantage is the first hurdle for the capital airport.
On the other hand, from the perspective of industry development trends, the evolution of airports from public infrastructure to top-level shopping malls is a development path that has been successfully verified in many places around the world. Therefore, continuing to tap the potential of non-aviation business is an important indicator to test the future growth potential of Capital Airport.
The duty-free business, which relies on the "natural flow pool" formed by inbound and outbound passengers to realize and absorb money, was a cash cow in the past, is a cash cow, and will still be a cash cow in the future.
In Caijing's view, there is an impossible triangle between the lessor of the airport duty-free shop and the lessee of the duty-free operator in the operation of the airport duty-free business, that is, it is impossible to meet the price advantage of duty-free goods at the same time, the lessee of the duty-free operator to obtain reasonable profits, and the lessor of the airport duty-free shop to charge high deduction points.
Whether it is the "guarantee and actual sales, take the high model" adopted by Shanghai Airport, or the "guarantee + commission" of Baiyun Airport, it is fundamentally through the highly binding of the interests of both parties, and the prosperity of both parties, and finally achieve the commercial effect of 1+1>2.
For the capital airport, it will take time for the international aviation market to fully recover, and whether it wants to or not, it must take this crucial step.
This step not only determines whether the present can turn losses into profits, but also determines whether the future can embark on the flywheel of certainty and growth.