To assess the financial impact of new airport or airline development, a business plan must be developed over a 20 or 30 year time horizon.

In the case of airlines, the key capital costs are normally related to fleet purchase or leases. For airports, the capital costs are likely to involve the phased development of new infrastructure, dependent on future capacity provision. The overall size and standard of the new facilities.

The key components of the financial appraisal include:

• Capital expenditure costs (Capex)
• Asset depreciation policy
• Expected revenues taking account of:
• The validity of the traffic projections
• The future airport charging structure
• The likely passenger spend on duty-free and other concessions.
• Operational costs taking account of:
• Future staff savings
• Other cost reduction measures eg improved IT systems
• Assessment of funding sources (eg to obtain an appropriate balance of    debt/equity).

Based on profit and loss and cash flow projections, a range of indicators can be used (e.g. NPV, IRR, ROCE) to assess the overall financial viability of the project.

The financial analysis can be supplemented by an economic appraisal to evaluate the broader economic, social and environmental benefits and costs.

The ASA team have substantial experience in undertaking these types of analyses for airport, airlines and air traffic service providers