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Non-aeronautical revenues crucial for growth

[/vc_column_text][vc_single_image image=”1574″ img_size=”full” alignment=”center”][/vc_column][/vc_row][vc_row full_width=”stretch_row” bg_type=”image” parallax_style=”vcpb-default” css=”.vc_custom_1567163833988{background-position: center !important;background-repeat: no-repeat !important;background-size: cover !important;}”][vc_column width=”2/3″][vc_column_text]Earlier this month, the Airports Council International (ACI) confirmed that the financial health and stability of the airport industry has remained intact despite economic and geopolitical hurdles across global markets. It did this in conjunction with the release of the 2017 ACI Economics Report – a comprehensive, annual research study that looks into the industry’s financial performance across all markets, whilst outlining airports’ key performance indicators (KPIs).

Globally, the industry experienced an increase in traffic volumes which left a positive economic result.

Simultaneously, revenues per passenger seem to have remained stable with negligible growth (now at US$20.05 per passenger), leaving us to conclude that the absolute growth in airport revenues has been proportional to overall passenger traffic growth.

Airports strive to increase the revenue per passenger and turn to non-aeronautical revenue streams to do this, therefore increasing the revenue per passenger with the lowest touch costs.

Global non-aeronautical revenues continue to constitute 40% of global airport revenues, reaching an industry value of US$60.4bn.

 

Non-Aeronautical Revenues

Non-aeronautical revenues continue to be a vital component of an airport’s bottom line. This source of revenue tends to generate higher net profit margins, whilst providing airports with more diversification of income streams which then serve as an additional cushion during economic downturns where passenger numbers may drop or passenger spend may decrease in one area or other.

Globally, in terms of the income generated from non-aeronautical revenues, we see that retail concessions, car parking and property lead the way. Retail and F&B are also experiencing the highest growth rates as a revenue stream, although we do find regional differences.

 

Regional Variations in Non-Aero Income

Middle East airports have the highest proportion of non aero revenue attributed to leasing of or revenue sharing from retail concessions. This is at 55% of their total non-aeronautical revenue.

Car parking, as a revenue stream, is also growing in importance – its proportional share has increased across all regions. However we see that North American airports continue to be the world leaders in generating revenue from car parking services; these services representing as much as 40% of the region’s non-aeronautical revenue. At 18%, revenue from rental car concessions is also relatively higher in North America compared to other regions. These sources offset the relatively low proportion of revenue that North American airports obtain from retail concessions, currently at 9.5%.

Property and real estate revenue/rent plays a critical role in the Asia-Pacific region, where we find that closely after retail’s 31.1% of non-aero revenues, property follows at a high portion of 25.4%.

 

What the Future Holds

Tobacco will continue to pose a challenge for many airports. As local regulations make the sale of tobacco products more difficult, airports will have to strive to increase the performance of other revenue streams or develop new creative sources of revenue to make up for the possible reduction in tobacco sales.

We will see more airports focus on improvement of passenger experience, and the reduction of stress caused by long security screening processes, in order to nurture a positive environment that entices passengers to use the often improved retail areas.

Airports will continue to invest in their current retail areas whilst developing their income portfolio by creating new revenue streams – this has become a widely recognised strategy across all airports regardless of size.

Understanding the passenger, their spending habits, and the overall performance of the non-aeronautical sector will continue to play a crucial role in the financial growth of airports.[/vc_column_text][/vc_column][vc_column width=”1/12″][/vc_column][vc_column width=”1/4″][vc_widget_sidebar show_bg=”false” sidebar_id=”sidebar_1″][vc_row_inner][vc_column_inner][vc_single_image image=”8164″ img_size=”full” alignment=”center” css_animation=”top-to-bottom” el_id=”open-newsletter-popup”][/vc_column_inner][/vc_row_inner]

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