Airport World editor, Joe Bates, reflects on the importance of income earned from non-aviation related activity in this ‘new revenue streams’ themed issue.
It seems hard to believe, but the last time ‘new revenue streams’ was the theme of Airport World was the autumn of 2011, and the thread running throughout it was that an ever increasing number of airports were beginning to think outside of the box when it came to generating non-aeronautical revenues.
The issue’s themed articles included features about airports offering management and consulting services; airport sister agreements; car parking innovation; Panama’s airport city ambitions and how Florence Airport was generating some of the highest advertising sales per passenger in the world.
Some of these issues naturally come under the microscope again this time around as airports continue to innovate and develop as businesses to reduce their reliance on aeronautical revenue.
Why is this so important? Well, as the latest ACI Airport Economics Report reveals, the average airport cost of $13.69 per passenger exceeds the $9.95 they typically bring in from aeronautical revenues per passenger, making the average $7.08 per passenger earned from non-aviation related activity absolutely crucial.
Retail concessions remain the largest source of non-aeronautical revenue for airports at 30.2%. Car parking revenue and property revenue/rent are the second and third largest sources of non-aeronautical revenues at 20.1% and 15% respectively.
And, as ACI World director general, Angela Gittens, noted in Airport World back in 2011, airports with diverse revenue streams have “the fiscal muscle to ride out the inevitable downturns in the business cycle when air traffic declines”.
She commented: “Worldwide, non-aeronautical revenue has become a key element in the airport business plan. Creative use of airport property includes the construction of a medical clinic at Dallas/Fort Worth International Airport, a casino at Amsterdam Schiphol, oil wells on the airport property in Denver, a golf course in the noise footprint at Tokyo Narita, and business and industrial parks at many airports.
“The attraction of the airport location can be very powerful. For example, office space at Schiphol commands rents higher than the equivalent space in downtown Amsterdam.
“Beyond the airport perimeter, many airports have successfully branched out into trans-border ownership, management and consulting. In summary, airport operators worldwide are looking to create new business opportunities in the fast-paced aviation marketplace.”
Her words are as relevant today as they were eight years ago and, as if to prove the point, we provide plenty of examples of non-aviation related business innovation in this mid-2019 issue of Airport World.
Indeed, the ‘new revenue streams’ themed section of this issue contains features about retail trends both in the terminal and across the airport campus; daa International’s global business interests; car parking innovation; airport hotels; revenue generating IT; and Singapore Changi’s hugely impressive new addition, Jewel Changi Airport.
Elsewhere in the magazine we catch up with some of the world’s top airport seating companies; learn about the power and benefit of brands; and turn the spotlight on Israel’s newly opened Ramon-Eilat Airport and Frankfurt Airport’s planned new Terminal 3.
Our main airport feature is El Paso, where director of aviation, Monica Lombraña, tells us more about her gateway’s pioneering ways in terms of non-aeronautical land development, striving for customer service excellence and the challenges of expanding its route network.
We also hear from ACI World’s Gittens about the importance of catering to customer needs in her View from the Top article; cover human resources in our regular ‘People matters’ column; and discover the latest route development and industry news in our regular ‘Cleared for take-off’ and World Business Partner pages.
Some food for thought anyway as you prepare to head off on your summer or winter holidays depending on where you live in this great wide world of ours!