ASSIGNMENT

NO
2
NAME: MOHAMMAD SUFYAN MALIK
S.ID:10669
COURSE: AIRPORT OPERATIONS
C.ID: 107857

3 Ways Airports Make Money

Parking, Ground Transportation and Rental Cars
Parking and ground transportation fees comprised 41% of total non-aeronautical
revenue in 2013, or $3.4 billion, the Concessions Benchmarking Survey found.
Ground transportation includes taxis, limousines, shuttles and buses that
transport airline passengers.

At 19.8%, rental car-related fees represented the next largest segment of non-
aeronautical revenue for U.S. airports, totalling $1.6 billion.

Concessions and Retail

Two major factors work in airports’ favour when it comes to generating income
from retail and concessions sales.

First, airline passengers typically have more spending power, according to the
ACI survey. As of 2013, passengers had a median household income of $75,000
to $90,000, compared to a national median of a little more than $52,000.

Second, the heightened security measures mandated after the terrorist attacks of
Sept. 11, 2001, mean passengers are spending more time in airport terminals,
arriving early to ensure they clear security in time to make their flights.

Increasingly, airports are featuring more food and beverage options, expanding
their offerings beyond national franchisers to include local restaurants and
vendors.

In 2013, U.S. airports generated $587 million from food and beverage sales, or
about 7.2% of non-aeronautical revenue.

Airport retail, meanwhile, is evolving from chocolate bars and magazines to

designer clothing and locally produced goods, transforming the terminal into
what has been described as a “travel megastore.”

The prevalence of smartphones, apps and other mobile technology means that
retailers and concessionaires can customize their offerings with geo-specific
targeting.

Worldwide, airport retail sales will see continuing growth through at least 2020,
supported by rising passenger traffic and an improving economy, according to a
2015 report by Verdict, a research and analysis company.

The beauty products and fashion sectors are expected to enjoy the strongest
growth, with more clothing retailers opening airport locations, the Global
Airport Retailing report found.

Automated retail units also are a growing trend, with a presence in 53% of North
American airports, according to the ACI’s Concessions Benchmarking Survey.
Those units, which averaged gross sales of about $107,000 in 2013, provide
travellers with 24/7 access to personal electronics, cosmetics and other consumer
items.

These “upscale vending machines” allow airports to produce income in locations

that would be too small for regular stores.

Commercial Development, Advertising and More

Office buildings, business and industrial parks, rail and transport infrastructure,
retail centres, hotels and logistics hubs are all potential commercial projects on
airport property that can boost non-aeronautical revenue streams.

Airports also generate revenue by selling advertising space inside and outside
terminals. Additionally, sponsored spaces, special events and branded areas can
generate operating income while improving airport ambiance and the passenger
experience.

As Airports Council International noted in a 2013 report: “Airports worldwide

have evolved from infrastructure providers into sophisticated, business-oriented
service providers. … The revenue generated from non-aeronautical revenue often
determines the financial viability of airports.”