The Secret to Keeping People in the Air? Groundwork | American Funds

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Investment Insights: The Long View

August 2015

The Secret to Keeping People in the Air? Groundwork

“History shows that as economies develop and populations gain wealth, one of the first things they do is fly.”

— Todd Saligman

Todd M. Saligman Investment Analyst Los Angeles office 7 years of experience (as of 12/31/15)
Globally, $543 billion worth of airport construction projects are in progress

Airport Construction Projects Worldwide and Investment Amount (in Billions)*

*As of January 2015

Source: CAPA - Centre for Aviation, Premium Airports Database, Data are for existing airports with projects either in progress or planned for and with a good chance of completion.

China started working on a new airport near Beijing on December 26, 2014. The airport, which is being designed by Netherlands Airport Consultants, is expected to be completed in 2018 and cost about 
$14 billion. Upon completion, the 7.5 million square foot terminal will accommodate about 45 million people per year. The terminal will later expand to handle an annual flow of up to 72 million people, about the same capacity as London’s Heathrow, one of the world’s busiest airports.

China leads the world in airport construction, and this will be Beijing’s second international airport. But airports are taking off all around the world. Globally, $543 billion worth of projects are in progress, according to research by CAPA Centre for Aviation.

In the U.S., for example, one of Denver International Airport’s (DIA) main runways is getting a $46.5 million face-lift. And, in November a 14-story Westin will open next to DIA, along with a new transit center housing a commuter railway that will take passengers to downtown Denver in 30 minutes.

But the Asia-Pacific region, including China and India, is driving much of the increase in the world’s air traffic. Millions of people are taking to the skies in that region. The demand is expected to be so great that Boeing, one of the world’s largest airplane makers, predicts that 35,280 new planes, valued at $4.8 trillion, will be in the air by 2032.

The Middle East, Latin America and Africa are also driving growth. Many of those regions will require significant investment in new or improved runways, terminal expansions and entirely new airports, a potential opportunity for such global companies as Caterpillar, Komatsu and Cummins, who provide the machines that help build the future.

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Statements attributed to an individual represent the opinions of that individual as of the date published and do not necessarily reflect the opinions of Capital Group or its affiliates. This information is intended to highlight issues and not to be comprehensive or to provide advice.