Where Now for Airport Commerciality?
Globalisation has fuelled the need for business and leisure flights as new economic and opportunities drive geographical expansion for companies and new wealth empowers huge numbers of curious, well-funded travellers to visit overseas.
Airports, and particularly the global hubs serving flag carrying airlines with established codeshare partnerships, make hundreds of millions annually. Only capacity ceilings for the sought-after landing slots limits the take.
Revenues from retail rentals, duty free and airport advertising concessions have kept increasing as passenger numbers and footfall continue to grow, meaning the commercial position for airports has just kept getting bigger and bigger. The expression ”build it and they will come” rarely seemed as apt.
Recent events have, of course, changed all this radically. Travellers are locked down, business is on Zoom calls and most planes are grounded. Last month Heathrow expected only 10% of a typical April’s traffic, is operating one runway and functioning only two of its five available termini.
This is long term. The effects of traveller confidence and the way we do business will change inexorably. Companies with greatly reduced revenue lines will have to make discretionary savings; the tech-facilitating online conference facilities have already and will continue to improve steeply; and, in any case, leisure and business travellers fearing infection or the comparative quality and access to medical care when away from home, will be loathe to fly.
Fewer flights means revenue from landing fees will reduce. Rental revenues from retailers and other associated income will follow as passenger numbers and throughput reduce.
So how can airports adapt to these challenges and emerge better suited and more relevant to the new complexion their businesses face?
