Airports can no longer rely on aeronautical airport revenue streams to remain viable. Despite a decade of consistent growth in passenger traffic, the devastating and unprecedented impact of the COVID-19 in 2020 resulted in a 55% drop in airline passenger revenues worldwide.
Before the COVID-19 outbreak, the airport industry expected to generate more than $200 billion in revenues this year. However, as airports begin the arduous journey to recover from the pandemic, subsequent lockdowns, and decreased customer confidence, the ACI predicts a 39% reduction in 2022’s projected baseline.
The pandemic has indeed taught us many things, but for airports, we’d argue one of the most critical learnings is the need for improved airport revenue management. This article will uncover some of the untapped revenue streams your airport already has and how you can optimise them to come back better during this period of recovery and beyond.
What are the revenue streams of an airport?
Airport revenue streams fall into one of two categories. The first, aeronautical revenues, comprises revenues from airline terminal space rentals, airline landing and usage fees, and passenger charges. The second, non-aeronautical or ‘commercial’ revenues, come from other activities at the airport such as retail and parking.
In recent years, we have witnessed the diversifications of airport revenue streams, with airports bidding for concessions and optimising commercial opportunities, such as retail, parking and lounge facilities. Airports are becoming increasingly reliant on these non-aeronautical revenue streams (particularly post-pandemic) to generate a profit and even use them to contribute to financing the airport infrastructure.
A great example of this is London Stansted Airport, which financed its new terminal infrastructure using retail revenues. The result was a better experience for passengers and no additional cost to its airline partners, which made the airport more competitive.
Today, airlines are increasingly looking to keep costs, such as airport charges, to an absolute minimum. So to remain competitive and attractive to airlines, airports must consider subsidising aeronautical charges and offering a better rate to airlines. How? With non-aeronautical revenue.
Examples of non-aeronautical revenue
Duty free and travel retail was created to provide an alternative source of income for airports, and in 1947, the first duty free shops opened at Shannon Airport in Ireland. Since then, duty free and travel retail have become a profitable worldwide industry.
In 2019, global duty free and travel sales reached 86.4 billion US dollars. Despite dropping to 44.05 billion dollars in 2020 (due to the COVID-19 pandemic), it continues to hold its value as one of the most important airport revenue streams.
According to the ACI Economic report, airport parking is considered the second biggest contributor to non-aeronautical revenue, accounting for 26.8%. Other examples of non-aeronautical revenue include airport lounge, meeting room hire, airport tours and food and beverage.
How can airports increase revenue
Is your airport already selling flights, hotels and holidays online? Have you considered that you can apply the same ecommerce principles to some of your non-aeronautical revenue streams too? Or perhaps, with increased data collection and analysis, you could be making more of your parking or the available space at your airport? Here we’ll look at some of the ways airports can improve revenue from existing streams.
Duty free and travel retail
Despite being one of the key airport revenue streams, duty free and travel retail are under increased pressure due to online shopping. So why not fuse the two? Offer pre-book duty free and travel retail via your airport ecommerce website.
As soon as a customer makes a booking on your airport ecommerce website, there is the potential to sell them everything they will need at the airport and on their trip in a single basket. Cross-selling duty free and travel retail will educate customers about your available products and encourage them to increase their wallet spend. Plus, offering the convenience of ‘click and collect’ or even gate delivery at your airport improves the passenger experience.
Even if customers don’t initially go for the cross-sell, you can send timely, value-added airport marketing emails to recommend relevant products they might have forgotten. Plus, personalised offers that encourage passengers to visit your duty free and travel retail stores to make a purchase at the airport.
Parking
We’ve already touched on the fact that parking is an important source of non-aeronautical revenue for airports but are you making the most of it? Introducing revenue management and dynamic pricing models can go a long way in accessing previously untapped revenue from your airport car park reservations.
Rezcomm’s parking reservation software helps airports take control of their entire parking operations, with tools to accept reservations through your airport ecommerce website, view live occupancy, manage capacity and take instant action.
Set flexible prices to account for demand fluctuations and base your pricing models on other factors, such as length of stay and occupancy levels. Doing so will solve both over and underutilisation of your parking facilities while creating additional revenue for your airport. Lower prices during off-peak hours will bring customers in and encourage them to park. Higher prices during peak times will discourage customers from using their own transport.
Perhaps, during busy times (when airport parking charges are at their highest), you could run a special offer with your Ground Transportation partners? For example, money-saving deals on pre-book bus, monorail, taxi or train tickets via your airport ecommerce website. This is something Rezcomm can help you achieve with our cloud-based reservation and ticketing management system.
Food and Beverage
Increase revenue for your airport with pre-order food and beverage services via your website. When customers make a booking, cross-sell food and beverage products that they can collect at your restaurants and bars or have delivered to their gate or airport lounge. It will unlock revenue for your airport and provide a more enjoyable airport experience for customers who no longer have to stand in lengthy queues.
Lounge
Optimise your airport ecommerce booking journey, and increase airport revenues with an airport lounge upsell. Pre-bookable access to your lounge creates a sense of exclusivity that customers can upgrade with attractive upsells (like a glass of champagne) and cross-sells (like food and beverage delivery or premium parking.)
Use Rezcomm’s Lounge product to take control of capacity and occupancy levels, ensuring you make the most of this untapped revenue stream.
Meeting room hire
When considering your untapped revenue streams, it’s worth noting the space you have available in your airport. Hiring meeting rooms is a great way to utilise your space effectively and generate more revenue.
Offer visitors a hassle-free and straightforward way to pre-book meeting rooms at your airport via your ecommerce website. Tailor the booking journey with cross-sells, such as equipment rental, pre-book food and beverage and parking reservations to improve your customers’ experience while increasing revenue for your airport.
Airport tours
Today, airports are more than just a gateway. They’re a destination in their own right that people will pay money to visit. Generate additional revenue for your airport with airport tours and VIP access to exclusive areas. Offer pre-book tickets via your website, and don’t forget to attach retail and food and beverage vouchers to encourage customers to spend more money at your stores, coffee shops and restaurants whilst visiting your airport.
Queueless Journeys
It’s fair to say that passenger confidence has taken a nosedive since the recent pandemic. Despite a worldwide vaccine rollout, many are still wary about visiting an airport and boarding a plane.
Customers want to feel safe and are even willing to pay more for an easier airport experience – hence why many airports are now investing in contactless technology.
Consider using Rezcomm’s Queueless Journeys to improve passengers’ journey through your airport. This module enables customers to pre-book a time of arrival anywhere queues typically exist in your airport and offers a fully contactless experience with mobile e-tickets.
Queueless journeys can be pre-booked through your airport website and offered as an upsell during the booking journey when customers purchase car parking, a flight or a holiday through your airport.
And if you don’t manage to capture the upsell at the time of booking, capture passengers’ attention at the airport with the option to scan a QR code and purchase queueless tickets via their mobile phones.
Loyalty & rewards
We all know that it’s more cost-effective to retain existing customers than acquire new ones, so why not prioritise customer retention with loyalty and reward schemes for your airport?
Rewarding customers for their bookings, reservations and purchases will increase passenger loyalty and keep them returning to your airport to spend more money. Essentially, you’re optimising a previously untapped revenue stream – your existing customers!
Rewards schemes are also a great way to encourage passengers that didn’t book flights or parking with your airport to do so next time. When they make a purchase at your airport retail store, visit one of your restaurants or even leave feedback, ask if they’d like to join your reward scheme. At the same time, you can ask them for their marketing permissions to obtain valuable customer data, drive personalised airport marketing communications and ultimately generate more revenue for your airport.
Airport revenue management
Revenue management helps businesses make better decisions and makes it possible to increase revenue without increasing the volume of products and services sold.
Airlines and hotels have long pioneered dynamic, demand-based pricing strategies for revenue management, and it’s time airports followed suit. But for this to work, good data, analytics and business intelligence tools are essential. Without data analysis, it’s impossible to predict customer behaviour – a vital part of optimising product availability and price to achieve maximum revenue.
Rezcomm’s Business products are designed to support your team with centralised customer information management, BI and analytics, yield management and reporting and forecasting. Plug in our Business products to gain increased visibility of your entire airport operations and enjoy easy-to-use dashboards to understand your data fast.
Optimise your airport’s untapped revenue streams with Rezcomm
When it comes to generating extra revenue for your airport, the solutions lie in your existing product and service range. We hope this article has inspired you with ideas on using airport marketing, ecommerce principles, dynamic pricing and yield management to optimise your existing airport revenue streams.
Take action with Rezcomm. Our plug-and-play airport marketplace comprises a wide range of products designed to help you unlock more revenue for your airport. Book a meeting with our team to discover how Rezcomm can support you with ongoing revenue generation.
Orchestrating digital strategy, Victoria Wallace is Rezcomm’s Chief Digital Officer. With specialisations ranging from digital marketing and CRM to UX design and ecommerce, she is an expert in integrating innovation and technology to deliver outstanding results in sectors like travel, parking, and airports.
