Flying these days might not be fun, but it's certainly a cash-cow for most publicly-traded airport stocks in Europe and Asia.
Two years ago, in my previous Sovereign Society service, Renegade Investor, I recommended British Airport Authority PLC (BAA), operator of Britain's airports. That stock went through the roof like several others that I didn't recommend, including Copenhagen Airports and Vienna Airports.
Airport stocks are very profitable and for two key reasons: Rising fees to access gates, and booming revenues from concessions. This trend is becoming even more compelling every year as air travel continues to recover and set records in many parts of the world following 9/11. And gate access fees have ballooned. Some airports, including London Heathrow, are currently building a new terminal to house all of British Airways' operations and will levy a fortune for widebody access, especially the new monster Airbus A380.
As for concession fees, many airports continue to modernize, adding retail capacity and of course, charging operators or leasees, a huge monthly fee. Tax-free shopping is mushrooming in many parts of the world as global economic growth remains largely buoyant and people continue to spend, especially affluent travellers. I love to shop, too, and always make a purchase or two when I'm in-transit in Europe because prices are actually less expensive compared to Canada, which slaps all sorts of duties on European garments.
Concession fees therefore add to the bottom line for airport operators as crowds become larger and congestion forces new expansion projects. This all adds up to big profits for investors over the near-term.
I'm now researching an Asian airport operator -- one of the giants in the region. Many of the airport stocks continue to trade at all-time highs and offer little value at this stage of the bull-market. But I'm pretty bullish about this operator and I'll tell you why in the February or March issue of The Sovereign Individual.
