Investing in airports vs. airlines

Investors are increasingly interested in the airport business instead of airlines due to the higher profitability and stability of airports. Unlike airlines, airports have fewer dependencies and face less competition. They have a virtual monopoly in a city, allowing them to charge fees to airlines for landing and parking, as well as generate revenue from passenger fees and cargo handling. Additionally, airports have non-Airports Economic Regulatory Authority of India (AERA) revenues, such as rent from shops, advertising, and parking fees. Moreover, airport operators can also monetize surrounding real estate for additional income. Listed airports globally had average margins of 32% before the pandemic, while airlines had close to 8%. This attractiveness has led to a surge in stock prices for airport operators like GMR airports infrastructure.