Monday, May 20, 2024
Covid-19 pushing airports to diversify into non-passenger related revenues

Covid-19 pushing airports to diversify into non-passenger related revenues

As passenger numbers fall in the wake of COVID-19, new white paper by world-leading airport consultancy, NACO, makes the case for airport real estate and non-passenger related revenues as key to resilience – and a vision of the future.

The paper reports that, with almost 90% of airports revenues being passenger-related, there is a clear need for airports to diversify their revenue streams in order to reduce both revenue volatility and the immediate negative effects of declining passenger traffic on their business.

The white paper is being published by world-leading airport consultancy and engineering firm, NACO (Netherlands Airport Consultants)which has over 70 years’ experience working on more than 600 airports in over 100 countries around the worldThe paper brings together research and wide-ranging data compiled by NACO, a company of international engineering consultancy Royal HaskoningDHV.

Speaking about the reasoning behind the white paper, Pieter van der Horstairport city development expert at NACO said: “We are approaching what would have been the busiest days of the year for major airports like Schiphol and others across Europe and the world – which are now close to empty as fleets are grounded, flights cancelled and many nations across the world are still in various stages of lockdown.

“Our white paper explores the impact of these closures, and specifically, the data indicating how airport real estate and non-passenger related revenues have been essential in cushioning the impact of the economic downturn.”

The paper finds that following the immediate impact of the pandemic, the almost total contraction in passenger-related revenues has led to a near evaporation of earnings for airports. This in turn will make post-crisis levels structurally lower for years to come and change the landscape of the aviation industry.

Van der Horst continues: “We see three developments at play which strengthen the case for diversification in non-passenger related revenues. Firstly, the pre-pandemic trend of decreasing retail revenues per passenger; secondly, major uncertainty around recovery of air travel; and finally, the introduction of green taxes and conditions for government support to airlines which add to the uncertainty.”

These developments, according to van der Horst, will inevitably impact passenger-related airport revenues. However, the green initiatives could provide an opportunity for airports to extend their networks with rail services, create multi-modal hubs and become more attractive overall for commercial real estate development.

Airport cities

Airport cities comprise the developments and infrastructure that surround airports. The developments and infrastructure are also influenced by the presence of the airport. Airport Cities can extend up to 5 km from an airport and incorporate commercial elements such as offices, hotels, conference centres and shops, as well as manufacturing and logistics facilities.

The white paper makes the case for airports – including smaller, regional airports – to develop Airport Cities through long-term lease-contracts and fixed charges that ensure a stable revenue stream from airport real estate. This applies even in times of decreasing passenger numbers or economic downturn. 

Van der Horst added, “In many ways, COVID-19 is a test in the run-up to bigger questions facing the industry such as climate change and potentially declining passenger traffic. Those who understand this then develop and diversify their airports to address these questions will be better positioned to ride out periods of uncertainty.”

Picture of James Graham

James Graham

James Graham is an award-winning transport media journalist with a long background in the commercial freight sector, including commercial aviation and the aviation supply chain. He was the initial Air Cargo Week journalist and retuned later for a stint as editor. He continues his association as editor of the monthly supplements. He has reported for the newspaper from global locations as well as the UK.


Stay informed. Stay ahead. To get the latest air cargo news and industry trends delivered directly to your inbox, sign up now!

related articles

Historic purchase: Saudia Group places the largest aircraft order in Saudi aviation history

AGI Global Logistics appoint Nicky Woodman as Manchester Co-Director