As with any other business, airports continuously seek to increase operational profitability and efficiency. As competition increases and partners and stakeholders shift their business model to meet new market trends, some airports struggle to keep their business profitable.
With an average of 40% of global airports’ revenues deriving from the non-aeronautical sector, and its increasing profitability vis-à-vis the aeronautical sector, it’s no wonder that many airports are turning to this US$58bn industry to increase overall airport profitability (Source: 2015 ACI Airport Economics Report).
Non-Aeronautical revenue streams have become a vital component of an airport’s total revenue. It tends to generate higher net profit margins than aeronautical revenues, providing diversification in an airport’s income portfolio whilst serving as an additional cushion during economic downturns.
Increasing pressures on aeronautical revenues are in fact prompting airports to continue developing alternative revenue sources, in particular through retail, F&B, real estate, advertising, car parking and car rental.
“Commercial or non-aeronautical sources of income such as retail concessions and car parking contribute to the diversification in an airport’s income portfolio and provide an additional cushion during adverse economic times,” explained Angela Gittens, Director General, ACI World at the ACI Airport Economics and Finance Conference held in London (March 2016)
“The airport revenue model is becoming increasingly diversified and sophisticated. Airport operators have moved beyond being mere infrastructure providers for aeronautical activities to varied and far-reaching enterprises.”
Generating commercial revenues
Faced with a shifting paradigm in the business model, airports are distributing their focus from a strictly aeronautical standpoint to fulfilling an increasing demand in non-aeronautical services which their infrastructure and positioning well allows them to do. As the non-aeronautical revenue stream grows and provides new dividends, a need to measure, manage and influence its performance, becomes imperative to ensure the profitability of a newly diversified income portfolio.
CA+ is a tool that enables airports to measure, manage, control and improve non-aeronautical revenues. It provides the opportunity to improve controls and reduce the delay in data analysis, increasing agility and responsiveness to trends as they happen. It also equips airports with a deeper understanding of performance figures when negotiating with both airlines and concessions, enabling them to obtain more favourable rates and focus on developing those routes that generate better revenue opportunities. Armed with a real-time understanding of their business, commercial teams can be refocused from data collection to data analysis and business development, optimising the retail mix and conversion. Digital advertising can be taken to a whole new level, with shorter campaigns targeting specific passengers and flights with real time sales results available for analysis immediately. Click here to learn more about the solution >>