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ECONOMICS Last modified on August 16, 2009

Big business

ACI director general, Angela Gittens, considers the impact that the global economic downturn has had on cargo and the need for airports to maximise potential revenue streams.

ACI’s traffic reports for 2008 and the first half of 2009 paint a pretty sobering picture overall, but nowhere has the stark reflection of economic decline been better illustrated than in the air cargo business.

Traditionally, cargo has displayed less volatility than the passenger side of our business, yet this time, the struggling world economy has battered the cargo industry, with a record drop of 25% in January. In the second quarter, airports reported a few pre-cursory signs that the downward spiral is flattening out – and there are positive stories to recount, as you will read in this issue of Airport World.

As responsible airport operators, our vocation is to be stable community service providers whose top priority areas are safety, security, customer service and environment. As responsible business managers, it is our job to diversify wisely and build relationships with partners that contribute to a robust business model that can weather tough times. Local communities and local businesses count on us for the long-term management perspicacity, not just for short-term crisis problem solving.

Many airports also have investors who count on us to pull through a slowdown without losing sight of our long-term objectives. We have a corporate responsibility to ensure cost-efficient operations, making wise investments that will translate into excellent service delivery for our carriers – passenger and cargo – and ultimately the end user, the traveller and the shipper.

Securing financial stability is particularly challenging in these times. We are required to not only plan for increased capacity that makes us ready for the next upswing, but also to invest in new communication and information technologies, in operational upgrades and environmental initiatives that help us reduce emissions and noise. Each has a price tag.

To achieve our business objectives, growing non-aeronautical revenues is of increasing importance. Airports can no longer rely on airline charges to ensure the ongoing maintenance and enhancement work required to keep our airports safe and efficient.

Indeed, airports have been subsidising airline operations for some time: aeronautical charges to airlines account for only 21% of overall airport income. Airports get 79% of their income from commercial airport activities and passenger service charges.

Click here for larger image

Click here for larger image

As a result, airports worldwide are seeking to trim costs and maximise potential revenue streams. The annual ACI Economics Survey show that airports are extending the scope and the proportion of non-aeronautical revenues, as the charts indicate. The third chart shows the rise in airport capital expenditure.

It is clear that airports worldwide will need to exploit the opportunities for non-aeronautical revenues if we are to continue to meet the needs of our customers and communities.

At the end of September, the 2009 Airport Business and Trinity Forum, jointly organised by ACI and The Moodie Report for three consecutive years, will bring together a powerful trio of airport platform business partners – airport managers, retailers and brands.

With these partners, airports strive to achieve the twin goals of customer service excellence along with revenue diversification and growth. They concoct enticing offerings that transform the airport space, adding spice to the travel experience with both worldwide brands and prized local products. Whatever their size or business venture model, their common goal is to delight and win the customer’s loyalty.

Everyone on the airport platform has a role to play in defining the travel experience. Let’s turn the current downturn into an opportunity – doing what we may have overlooked in boom times.

Let’s focus on training staff, perfecting our performance through audits and benchmarking, introducing greater efficiencies that streamline our processes, and let’s focus on our customers.

Airport World 2009 - Issue 4

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