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The 21st ACI EUROPE Annual Airport Trading Conference & Exhibition takes place in Oslo on April 24th-25th, with the theme ‘Engaging the air travel consumer to spend through technology and innovation’.
This year’s theme reflects the ever-growing importance of commercial activities for Europe’s airports since revenues from aeronautical activities coming from airlines and passengers do not cover the cost of the airport infrastructure they use. The latest figures indicate a cost under-recovery of €4 billion². While airport retail has been an established element of the travel experience for many decades, airports have in recent years focused on developing wider commercial activities – as part of their transformation from mere infrastructure providers into fully fledged and diversified businesses.
As a result, commercial revenues now account for an average 48% of total airport revenues. Current trading conditions underline the logic of this strategic direction. Although the recovery in air traffic experienced in 2011 saw 100 million more passengers travel through European airports, traffic now appears to be losing momentum. This is the result of stalled economic growth across many parts of Europe and renewed fuel price inflation. Moreover, increasing airline pressures and the need to commercially incentivise air traffic are affecting aeronautical revenues.
Conversely, commercial revenues have shown a remarkable resilience in the context of the global financial crisis – growing by 15% in 2010 and adding more than €2.5 billion in revenues for airports. This is the result of an increased strategic focus by airports on commercial activities within terminals and beyond, with airport city concepts, for example. In this regard, the growth in retail revenues (+27%) was complemented by equally dynamic growth in real estate & property revenues (+32%) and advertising (+27%), reflecting effective cooperation and alignment with commercial partners.
Within the terminals, the diversity of the retail and services on offer, as well as the ability to deliver timely information to passengers, are intrinsically linked to the airport experience. Europe’s airports are actively innovating in this regard, as evidenced by the findings of the ACI EUROPE Digital Report 2012³. However, the passenger experience is still suffering substantially from the impact of the restrictive and unfair ‘one bag rule’ being enforced on passengers by some airlines.
Olivier Jankovec, director general ACI EUROPE commented “Today, commercial activities are just as important as aeronautical activities for airports. This is what ultimately pays for the infrastructure – and our ability to invest and modernise is increasingly dependent on our offering in terms of retail, food & beverage and car parking as well as the management of our property portfolio and advertising.”
He added “But this is not just about money, it is also – crucially – about quality. Our range of commercial activities and services has completely redefined the airport experience – for the passenger, but also for the residents of our communities. It is a win-win on all fronts.”
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.
