Taking airport ownership to new heights

Airports are one of the few infrastructure assets where you can see the long-term in motion. Whilst passenger demand tends to increase steadily, major construction projects can be required to unlock step changes in capacity and service levels, and the payoff from a transformational upgrade can take a decade to be fully realised. But when it works, it’s a reminder of what infrastructure investing is supposed to deliver: long-term assets that have the potential to be improved over time, not just owned.

For Canadians, the themes are timely: Canada has been exploring new models for airport investment, including a greater role for private capital to modernise key hubs and address capacity and service needs, areas where IFM’s global experience is relevant.

A long-term mindset shaped by pension-fund ownership

Ken Luce, who joined IFM Investors in 2020, spends much of his time thinking about that kind of timeframe, and what it means for infrastructure investors today. IFM’s purpose is to invest, protect and grow the long-term retirement savings of working people. IFM helped establish infrastructure as an asset class in Australia in the mid-1990s, and is 100% owned by pension funds, primarily Australian pension funds.

This ownership model shapes both strategy and culture: a focus on long-term stewardship, long-lived assets, long-lived partnerships, and decisions that aim to continue delivering value five, ten years and beyond. “In Canada, our commitment is reflected in the opening of IFM’s Toronto office and the growth of our client base, from our first Canadian investor in 2012 to more than 200 Canadian institutions today, as well as our work partnering with governments to help attract capital and support infrastructure development,” Luce said.

An evolving approach to infrastructure portfolios

The bigger change, from his vantage point, is how quickly investors have matured in their thinking about infrastructure portfolio construction. Five years ago, many still framed infrastructure as “core”, “core-plus” or “value-add.” Today, those buckets feel less like hard choices and more like building blocks. Investors have now seen the asset class operate across different market environments, helping define its role in a diversified portfolio rather than a tactical sleeve. Canadian institutions, many of which moved early into infrastructure, are comfortable treating it as a permanent allocation and then shaping it internally to pursue different risk-return objectives.

In private markets, infrastructure managers can play a more active role in asset-level decisions in ways public investors simply cannot. “These are assets that our funds may wholly own allowing us to influence their strategic direction over the long term on behalf of our investors,” Luce said.

Manchester Airports Group: the case for long-duration ownership

MAG is the UK’s largest airports group, operating Manchester, London Stansted and East Midlands airports, and serving more than 66 million passengers a year. Jointly owned by Manchester City Council and funds managed by IFM which holds a 35.5% stake. This structure may offer useful lessons for Canada as it considers models that blend municipal ownership with private capital.

Manchester Airports Group offers a clear case study in why infrastructure investing depends as much on time horizon as it does on asset selection.

Luce points to the qualities investors typically look for in core infrastructure: high barriers to entry, predictable cashflows, and downside resilience. For airports specifically, the group also benefits from diversified revenue streams including car parking, retail and property.

“They’re large, diversified businesses,” he said, adding it reduces dependence on any single revenue source and can help build resilience across changing demand conditions.

Long-term capital supporting long-term transformation

A defining example of long-term capital at work is the Manchester Airport Transformation Programme (MANTP). The project more than doubled the footprint of Terminal 2 and resulted in a passenger capacity uplift for the airport of approximately 50% to around 42 million passengers annually. Manchester Airport still retains additional runway capacity above the new terminal limit, positioning it for further long-term growth. The upgrade was pursued because the UK airport market is capacity-constrained and has experienced sustained demand over time, creating a basis for long-term planning and investment with an attractive business case.

Luce adds that effective management and execution, not just macro trends, can help drive future returns, MAG has obtained planning permission to expand the terminal at London Stansted, leveraging insight gained from the Manchester project.

Rising expectations for essential service providers

As private capital increasingly works alongside the public sector in supporting essential assets, expectations around asset stewardship continue to rise. Luce points to health and safety initiatives across IFM’s managed portfolio of toll roads, from seat belt education programs to the use of cushion trucks during maintenance, as examples of how value creation can increasingly come from safer operations, decarbonization initiatives, strengthened stakeholder relationships, and more resilient infrastructure assets under stress, rather than from traffic growth or pricing alone.

For advisors, this raises the bar in manager selection. Luce argues that one-way managers can differentiate is by leveraging a broader ecosystem of assets. IFM managed funds hold ownership stakes in airports globally, including MAG and Sydney Airport, creating long-standing relationships with airlines and suppliers that can provide early insight into emerging sector trends.

He points to electrification as a major trend driven by airports’ net-zero commitments and shifts in outsourcing models as ground-handling companies aim to reduce capital intensity. In his view, understanding these dynamics helps IFM apply lessons across the portfolio, to support long-term resilience and effective execution.

Beyond defence: infrastructure’s role in stability and long-term growth

Infrastructure has long been marketed as steady and defensive. That conversation is evolving. The right infrastructure allocation can still contribute to stability but also provide exposure to growth through long-cycle projects, operational improvements, and value creation initiatives that are not solely dependent on macroeconomic conditions.

As airports demonstrate, durable returns often come from patient execution. Lift doesn’t come from speed alone, it requires a long runway, a clear plan, and the discipline to stay on course long enough to take off.

This article has been produced in partnership with IFM Investors