The new Dulles Airport Master Plan outlines expansion plans more than a half-century to accommodate growth to 90 million annual passengers. The Master Plan lays out the roadmap in which terminals will be developed, redeveloped and razed, and an extension of AeroTrain service to a new Concourse F along with a potential for a 5^th runway.
IAD’s new use and lease agreement includes a $9.0B capital program for a 15 year period. That’s about $800+ Million per MAP of growth – how does it compare to the rest of world? And more importantly can this growth be accommodated in a more cost-efficient manner with P3 capital? That’s the question the Department of Transportation (DOT) wants to know and has issued a Request for Information (RFI) seeking out of the box ideas for redesigning IAD. Submissions may include:

• Design proposals
• Construction concepts
• Financing approaches, including public–private partnerships (P3)

At this stage, the roadmap is to shortlist the interested parties based on the initial ideas for a more formal P3 process that will take months to conclude.

2040 Capital Construction Program

Source: REPORT TO THE STRATEGIC DEVELOPMENT COMMITTEE for Approval of the Dulles International Airport Master Plan

The Metropolitan Washington Airports Authority (MWAA), which operates Dulles under a long-term lease, for consideration and potential sponsorship is supportive of the move, as it sees any long-term development to incorporate P3 capital in some form.

Airport P3 Investment Decision Framework

There are several levers that need to be evaluated as part of any P3 assessment.

At Avinia, we have primarily worked on the buy side and supported investors and global airport operators to evaluate the investment attractiveness of airport assets in Asia Pacific, Africa and Europe.

We know from experience that airports attract P3 capital not because of traffic growth alone, but because of stable rules, predictable cash flows, disciplined capex, and credible governance.

In this article, we take a closer look at demand fundamentals. Other factors may be examined in future articles.

IAD Aviation Traffic Forecast

2024 saw record passenger numbers at IAD, adding new airlines and boosting system-wide totals, indicating strong demand. On the back of a boom in international service, aviation traffic at IAD has grown in 2025 by leaps and bounds – with 17 new international routes across seven airlines, spanning Asia, Africa, Europe, and the Middle East, and up gauging to higher density new gen aircraft. IAD is one of the fastest growing international hub airports in the United States.

The forecast in the Master Plan was done in 2021, and a lot has happened since in terms of traffic growth. Actuals have outpaced the Master Plan numbers in 2022 and 2023 though Scenario 2 appears to have baked in the anticipated growth by 2024 (2.3% CAGR from 2024 to 2045).

The Avinia team ran a range of scenarios. ARIMA model with one autoregressive term, one order of differencing, and no moving-average term was found to be a good fit for predicting future values based on the recent growth in traffic. The model generated numbers that were closer to Scenario 2 (which can be considered the high case) projecting total passenger volumes of 38.6 MAP in 2040 (2.1% CAGR till 2045).

Typically, for a P3 asset due diligence exercise, various regression based (socio-economic) and mathematical modelling (ARIMA/SARIMA etc) can be used to encapsulate a range of outcomes and define a blended outcome (which could be subjective based on the market understanding).

Probabilistic modelling (using a monte carlo simulation by defining uncertainty in the independent variables) is also a robust methodology. The availability of advanced tools and the computing power allow these scenarios to be run in a very short timeframe and can be leveraged for decision making.

The anticipated growth of traffic at IAD is clearly very attractive for investors. External shocks due to economic or geopolitical factors could dampen the numbers. Future shocks can be modelled by looking at past forecast errors to define a low case scenario.

United Airlines is the dominant carrier with almost 49% market share (excluding the code shares with regional carriers). The market share is closer to 60% including United Express (CommuteAir) and the regional carriers that that have purchase agreements with UA. This level of dominance carries both advantages and risks.

UA’s large, diversified network across domestic, transatlantic, transpacific, and Latin American markets and yields from international passengers is positive from a cash flow perspective. But it also brings risks with geo-political factors that are beyond the control of the airline.

The Herfindahl-Hirschman Index (HHI) measures the size of companies relative to the size of the industry they’re in. The HHI is a common measure of market competitiveness. It can range from close to zero to 10,000 with lower values indicating a less concentrated market. Higher the number, the more concentrated the market is and the higher the risk in terms of airline dependency.

HHI based on 2024 seats supply at IAD is about 3,900 – indicating a highly concentrated market and dependency on a single carrier. Risks associated with any monopoly business is known. As a dominant hub carrier, United’s financial health is critical to airports with high market share concentration. United Airlines is financially stable, well capitalised, and strategically diversified, making it a strong anchor carrier. However, their wide-ranging international exposure adds risk for the growth of international traffic – a key component of the overall aviation traffic growth anticipated at the airport.

And there is historic precedence at IAD. In 2011, the merger of UA and Continental reduced the supply at IAD thereby leading to a drop in the passenger traffic volumes.

What investors and P3s look for is a strong non-aeronautical performance to dampen the traffic volatility – look out for the non-aero review in a future newsletter.

There are many pieces to the P3 puzzle – some factors are more dominant depending on the market – and the key is to analyze the whole spectrum holistically to drive a bankable business plan.