Aviation or Infrastructure?

maverick · #1 24th February 2008, 12:05 AM

Sunday's Economic Times has this report about the Hyderabad and Banglore airports. It states that the pessanger traffic is set to touch 120 million and will surpass Australia. This is a growth of 27%, the highest in the world.

Now, seeing this the Aviation industry should stand to gain a lot in the future if it continues at the same pace. And by building new facilities for this industry, infra sector is the one that will gain as we might need such facilities in all the major cities sooner or later.

Now what remains to be seen is, which one gains more? The direct gains seem to be more for the aviation sector, but they will have to struggle to keep the expenses in check and increase the facilities provided to the customers.

magnet · #2 1st July 2011, 02:57 PM

Quote:

Originally Posted by maverick

Sunday's Economic Times has this report about the Hyderabad and Bangalore airports. It states that the pessanger traffic is set to touch 120 million and will surpass Australia. This is a growth of 27%, the highest in the world.

Now, seeing this the Aviation industry should stand to gain a lot in the future if it continues at the same pace. And by building new facilities for this industry, Infra sector is the one that will gain as we might need such facilities in all the major cities sooner or later.

Now what remains to be seen is, which one gains more. The direct gains seem to be more for the aviation sector, but they will have to struggle to keep the expenses in check and increase the facilities provided to the customers.

Interesting article about destruction of Air India. Also gives details how the other companies in this sector work.

The Praful Patel Guide to destroying AI – Revised Edition | Firstpost

Alchemist · #3 12th July 2011, 08:48 AM

I don't think there is any listed company that gets majority of its revenues from airports.

Most of the listed infrastructure companies are either diversified infrastructure companies or are into road projects.

As far as I know, GMR Infrastructure is the only listed company with substantial revenues coming from airports.

As per consolidated FY 2011 results of GMR Infrastructure, 41% of the company's revenues came from Airports.

Thus, anyone who wants to invest in airport infrastructure, has only one company to look at - GMR Infrastructure.

GMR plans to list its airport business, but that won't happen before 2016.

Quote:

Two sources familiar with the development said the energy business holding company will go public in fiscal 2014, while the airport business will go public in fiscal 2016.

GMR Infrastructure plans IPOs for energy, airport business - Money - DNA

As far as airline stocks are concerned, I am a bit skeptical about the long-term prospects of these companies.

Running an airline business isn't easy. The business not only needs a large initial investment, but the operating costs are very high too.

Airlines sell a "perishable" commodity and don't have any pricing power when the demand for the commodity is weak.

According to Warren Buffet, the airline industry as a whole, has not made any money till date.

Quote:

In an oft-cited barb, Warren Buffett once said any right-minded capitalist who had seen the Wrights' contraption take to the skies in Kitty Hawk might have shot it down and saved investors 100 years of agony. Quite simply, he argued, airlines as a whole hadn't netted a dime since 1903.

Airlines still struggle with paths to profit - Technology & science - Science - Tomorrow's Wright Brothers - msnbc.com

If an investors wants to invest in the airlines industry, he needs to track the industry careful.

Investment should be done when the cycle is down and profits should be booked when the cycle is favorable.

Buy and hold isn't a good strategy for this sector.