The nature of the airport business changed vastly over the last four decades.
Traditionally, airports were regarded as basic transport infrastructure provider to airlines. In other words, they were facilitating airline operations without necessarily pursuing alternative revenue sources, and certainly not capitalizing on airport traffic to the full extent.
Consequently, aviation-related or so-called aeronautical revenues used to be the most important source of operating income for many decades.
Fundamental changes have happened over the recent decades.
The world’s airports have undergone a wave of corporatizations, and over 700 airports faced private sector participation. Close to one-half of global passenger traffic is now handled by airports with some kind of private sector involvement. Even the government-owned airports are mandated to operate as commercial entities and generate real economic returns.
Today’s airports are no longer merely providing infrastructure for airlines but have evolved into sophisticated market entities with diversified revenue streams. Non-aviation, also called non-aeronautical or commercial revenue has, therefore, become an integral parameter of an airport’s performance and an important determinant of airport economics.
Airports’ non-aeronautical revenues represent a fundamentally important area for the airport community. ICAO’s Policies on Charges (Doc 9082) recognize the continuing importance of revenues from non-aeronautical activities and recommend the full development of such revenues which might, at the airport’s discretion, offset the cost base for charges. Lastly, non-aeronautical revenues are an integral part of the airport business and indispensable to the ever-evolving concept of passenger experience.
As of 2019, non-aeronautical revenues contribute around 40% to the overall structure of airport revenues on the global level. In real terms on a per-passenger basis, it is equivalent to $7 (US dollars), and the overall value of non-aeronautical activities is estimated at over $70 billion worldwide. The typical non-aeronautical activities pursued by most airports include retail concessions and duty-free, car parking and car rentals, food and beverage, advertising, and real estate rentals. Every airport has a unique portfolio of non-aeronautical activities which address demand and also capitalize on specific market opportunities. However, it remains a living and constantly evolving area of the airport business and may benefit from a closer engagement of ACI and its analytical and advocacy capabilities.
As the year 2020 posed an existential threat to the airport business with the magnitude of the reductions in traffic and revenues documented by ACI, it also became clear that the recovery trajectory will be slow and challenging. Concurrently, a whole set of unanticipated issues around managing airports’ commercial activities ensued, as most of the conventional contractual frameworks and business practices could not anticipate traffic coming to a virtual standstill and recovering at a lackluster pace.
Nevertheless, the world’s airports are looking beyond the current crisis: they do not lose confidence in the strong potential to recover, grow, diversify their commercial activities, and take the non-aeronautical side of the business to a new level. It is for this reason that ACI World is establishing a sub-committee of its Economics Committee dedicated to the subject of non-aeronautical activities and revenues.
ANARA will be a relevant platform to discuss, brainstorm, investigate, analyze, and formulate strategies, tactics, policies and industry positions on how to improve, expand, facilitate and diversify the array of non-aeronautical sources of airport revenues for the benefit of the industry, the air transport value chain, passengers, and the wider range of stakeholders.
ACI World is developing a more precise working agenda of topics and priorities to be addressed by the ANARA subcommittee, but the topics will certainly include potential sources of non-aeronautical revenues, optimizing concession revenues and managing relationships with concessionaires, procurement processes, among others.
In order to ensure balanced representation of experts on the subcommittee and also solicit interested ACI members, ACI opens ANARA membership to all interested professionals part of the ACI community.
Subject-matter experts from ACI’s member airports, ACI World Business Partners (WBPs), and ACI Regions experts in the airport business, economics, commercial and business development, administering concessions, business-to-business relations or other closely relevant professional domains are welcome to contact Ilia Lioutov, Director, Economics and Policy regarding opportunities to join ANARA.
Disclaimer: Acceptance of applications will be at the discretion of the Chair, Vice-Chair, and the Secretary of the sub-committee. Even though there is no constraint on the number of members admitted to ANARA, membership will be limited to ACI member airport operators and World Business Partners. Other non-member organizations may participate and present pertinent activities and findings (e.g., research, software, services, etc.) at meetings, but participation may only be limited to a portion of the meeting. These decisions will be at the discretion of the Chair, Vice-Chair, and the Secretary of the sub-committee.