ACI World’s new sub-committee devoted to the non-aeronautical side of the airport business
The nature of the airport business changed vastly over the last four decades. Traditionally, airports were regarded as basic transport...
Nov 15, 2021
It is of general knowledge that the airport business is two-fold: it combines its core aviation-related activities with non-aeronautical, otherwise known as commercial services, capitalizing on passenger traffic and other airports users such as retail, duty free, car parking, or hotels
Over the last four decades, the nature of the airport business has significantly changed. The world’s airports have undergone a wave of corporatizations, and over 700 airports have welcomed private sector participation. Close to one-half of global passenger traffic is now handled by airports with some kind of private sector involvement. Even government-owned airports are mandated to operate as commercial entities and generate real economic returns, which is reflected in the way airport operators are approaching the commercial side of the business.
Considering its high share in the overall revenue structure – 40% on a global scale, and up to 50% at some large airports in certain parts of the world – non-aeronautical revenues are an important determinant of airports’ economic viability. They are an indispensable part of the airport business.
As the COVID-19 crisis hit the industry and passenger traffic practically disappeared, reaching its lowest levels in Spring 2020, airports lost both aeronautical and non-aeronautical revenues, as both streams by and large depend on passenger traffic.
With the global vaccination efforts and the gradual return of passenger traffic, the airport business landscape looks different. The pandemic has changed the relationship between retailers, food and beverage, and other commercial entities, and airport operators, encouraging both sides to explore new partnership models. These have included the revision of the balance of risk among other key business parameters.
The changing relationships between airport operators and commercial partners are the subject of the ACI WAGA pre-conference workshop.
It was during the COVID-19 crisis that ACI decided to give more attention to the non-aeronautical side of the business. This is when ACI launched a new sub-committee dedicated to the topic – ANARA, which stands for Airports’ Non-Aeronautical Revenues and Activities.
After the initial scoping exercise, this expert group decided to structure its work within four working groups dedicated to specific topical areas. One working group was established to look specifically into the topic of concession agreements and considered fully responsive to the spirit of time and to the needs of both airport operators and concessionaires, many of which are also ACI World Business Partners.
COVID-19 has led to the rethinking and readjustment of the commercial relationships between airport operators and their concessionaires. Many traditional frameworks were not designed to cope with crises of such magnitudes. The pandemic has highlighted the need for an alternative outlook on the way that commercial contracts are structured so as to consider future uncertainty on passenger profiles and traffic volumes.
This is especially true for leases that incorporate the minimum annual guarantee (MAG) mechanism or fixed rent clauses. While many contracts include a “force majeure” clause, this does not necessarily cover pandemic scenarios and in many instances, there is no formal agreement in place to review commercial terms in the event of such a situation.
It is more important than ever to ensure that airport operators and business partners have a regular, open, and transparent dialogue and maintain those positive cooperative and synergetic relationships that have developed over the years so that both parties can jointly navigate through any future challenges affecting the industry.
The pre-conference workshop on non-aeronautical revenues and new business models will be moderated by Carlos Criado, Air and Commercial Services Consultant, who has previously held senior positions in commercial development at major airport groups. The panel of speakers will consist of Manuel Gutierrez, Chief Commercial Officer, ASUR; Rene Reidi, Executive Advisor, Central and Latin America, Dufry; Adriana Echandi, Chief Executive Officer, Morpho Travel Retail; and Isidoro Alanis, Chief Executive Officer, Global Exchange.
The workshop will touch upon the following key topics of interest:
The 2021 ACI Latin America and Caribbean/World Annual General Assembly, Conference, and Exhibition (WAGA) brings together senior executives of the airport industry from all over the world, and features discussion topics that shape the way in which the aviation industry is quickly evolving, including the topic of non-aeronautical revenues. The airport community will gather in Cancún, Mexico, from 21–24 November 2021.
Do not miss the opportunity and register for the event.
