Non-aero revenues can take many forms – with some being passenger-dependent like parking, retail, and food & beverage facilities, and others (cargo and real estate) offering revenues less dependent on passenger traffic.
Non-aero revenues are mostly unregulated and tend to be a larger contributor to overall profits – meaning growing non-aeronautical revenues is a good thing in itself; without even thinking about diversification. Non-aero revenues today represent about 28% of total operating revenues at African airports. Globally, this figure is more than 40%, indicating there is room for growth in this area.
These trends and insights highlight the need for optimization of physical retail space and integration with digital platforms. Airports must create an omnichannel experience that seamlessly connects in-store shopping with virtual environments.
Digital transformation is a complex process that requires organizations to invest in digital capabilities. We have previously written about this in the context of the future passenger experience and visa processing in Africa.
While cargo infrastructure capacity is important, successful cargo development depends on much more. To develop a strong cargo ecosystem many aspects, need to come together, and this takes time and effort. As described in our recent guideline document, it starts with understanding the current situation, gathering data and consulting with stakeholders. Based on this, a cargo vision and plan can be defined that describes the way forward for enhancing capabilities and developing infrastructure.
Finally, but perhaps most importantly, there is airport real estate – which presents a big opportunity for diversification and building resilience. Many airports have large land areas at their disposal and are often located in strategic locations near cities and transport links. This makes them well suited for the development of prime property and real estate.
In 2018, real estate revenues made up approximately 14% of non-aeronautical revenues at African airports, compared to more than 26% in the Middle East (see Figure 5). Apart from the direct financial contribution, real estate provides a ‘cushioning effect’ for airport revenues. In a 2020 White Paper we analyzed this effect for a number of airports in Europe, North America, Asia and Africa. The data showed that growth in real estate revenues was significantly higher than growth in air traffic.
A broad revenue base with income from a variety of sources is important for airports to deal with inevitable downturns. Building income streams that are not linked to passenger traffic, such as cargo and real estate, reduce business risk in the case of an economic downturn, crisis, or pandemic.
Growing revenues in those areas starts with insights into the situation at your airport and a good relationship with stakeholders. Gathering and analysing relevant data is key to preparing targeted plans and making the right investment decisions. Investments in staff capabilities and stakeholder relationships may be as important as bricks and mortar.
When it comes to capital expenditures for infrastructure or facilities, involving specialists to determine capacity needs and appropriate business models can be key to success. Keeping these aspects in mind can support airports in building business resilience.