Sponsor Message:
Civil Aviation Forum
My Starred Topics | Profile | New Topic | Forum Index | Help | Search 
How Do Airports Increase Their Revenue?  
User currently offlineDTWNWA From United States of America, joined May 2003, 171 posts, RR: 0
Posted (10 years 11 months 3 weeks 6 days 19 hours ago) and read 6987 times:

What are the innovative measures Airports around the world have taken to increase their non-landing fee revenues? We all know they make money from parking fees for cars and concessions. But is there anything else like setting up a shopping mall near the airport?

12 replies: All unread, jump to last
 
User currently offlineBigPhilNYC From United States of America, joined Jan 2002, 4076 posts, RR: 54
Reply 1, posted (10 years 11 months 3 weeks 6 days 19 hours ago) and read 6983 times:

The way many modern airports are, they practically ARE shopping malls inside the terminals. It's not just a newsstand and a bookstore anymore. Now it's perfume shops, clothing and electronic stores, tons of eateries and just about anything that you would see in a shopping mall.

But I would think that most money comes from airlines renting out terminal space.

Other people will know more.

-Phil



Phil Derner Jr.
User currently offlineLuv2fly From United States of America, joined May 2003, 12090 posts, RR: 49
Reply 2, posted (10 years 11 months 3 weeks 6 days 19 hours ago) and read 6976 times:

Advertising, like the signs posted as you walk to your gates for one.


You can cut the irony with a knife
User currently offlineGreg From United Kingdom, joined May 2005, 0 posts, RR: 0
Reply 3, posted (10 years 11 months 3 weeks 6 days 19 hours ago) and read 6962 times:

The easiest way: charge a passenger handling tax or fee.

User currently offlineRen41 From United States of America, joined Jan 2001, 1524 posts, RR: 1
Reply 4, posted (10 years 11 months 3 weeks 6 days 19 hours ago) and read 6956 times:

Also landing fees

R41


User currently offlineRajivvyas From United States of America, joined Apr 2003, 113 posts, RR: 0
Reply 5, posted (10 years 11 months 3 weeks 6 days 18 hours ago) and read 6946 times:

Most of these are old. From what I recollect, landing and gates fees are the main revenue generating source followed by parking, eateries and shopping. But I can't think about anything else. Not even sure if the airport can try some innovative ways because of security issues.



User currently offlineTom in NO From United States of America, joined Nov 1999, 7194 posts, RR: 33
Reply 6, posted (10 years 11 months 3 weeks 6 days 18 hours ago) and read 6937 times:

Airports derive their revenues from a number of sources:

1) landing fees
2) space rental fees from airlines (gates, offices, ticket counter, baggage claim and makeup)
3) concessionaires (minimum amount, plus a percentage of revenues, as well as space)
4) parking lots (if self-operated, all revenues come straight to the airport; if operated under a contract, airport takes minimum amount, plus a percentage)
5) taxis, limos, off airport shuttles (yearly fee)
6) PFC's (used only for capital consruction projects, or possibly for bonds)
7) rental car agencies
8) game room (video games)
9) advertising
10) aircraft parking
11) fuel flowage fees from fueling companies
12) FBO's: space, fuel flowage
13) hangar rentals
14) interest income from bonds, PFC's, etc

That's a fairly all-inclusive listing. Most of the revenues are met via contracts with the various agencies. If you're interested in how an airport prepares a budget, either email me, do a search on a.net (I've detailed it before), or give me a little while, I'll post it during my lunch break. It can get detailed.

Tom at MSY



"The criminal ineptitude makes you furious"-Bruce Springsteen, after seeing firsthand the damage from Hurricane Katrina
User currently offlineContinental From United States of America, joined Jun 2000, 5508 posts, RR: 18
Reply 7, posted (10 years 11 months 3 weeks 6 days 18 hours ago) and read 6923 times:

Many, like MSP make additions to the airport. They make them more convinient for the passenger, attracting them to fly. Also, they add more gates, which attracts more airlines, which means more landing fees, etc.

co


User currently offlinePinsent From Canada, joined Jul 2001, 92 posts, RR: 0
Reply 8, posted (10 years 11 months 3 weeks 6 days 17 hours ago) and read 6896 times:

If your airport is in Canada, you could simply just increase the tax, or create/raise the AIF. Seems to be an acceptable trend up here. Pissed

User currently offlineTom in NO From United States of America, joined Nov 1999, 7194 posts, RR: 33
Reply 9, posted (10 years 11 months 3 weeks 6 days 17 hours ago) and read 6890 times:

I'll agree in principle with what John says, however, as we have learned with AA at both Nashville and RDU, the old adage of "build it, and they will come" doesn't hold true any more. Also, the thing to remember about adding gates, space, etc, is that my (the airport's) operating and maintenance costs go up, as well. In other words, will it be to my benefit to make this addition.

OK, my lunch hasn't arrived quite yet, so here's a quick rundown on how airports do their budgets (in case anyone wants to know):

Refering to the list of revenue sources I detailed above.

The airport derives its anticipated expenses for the year being budgeted. These expenses include, but not limited to:

1) operation and maintenance (very wide ranging)
2) capital improvements (can be exceedingly variable)
3) payroll
4) debt service on bonds
5) depreciation of facilities

Those expenses are then totalled up. Then we do the anticipated revenue side. We figure out all anticipated revenues listed in my previous post EXCEPT landing fees. That amount is then totalled up, and the remaining difference between anticipated revenues and expenses is made up via the landing fee.

Now, depending on if the airport winds up with a surplus or a deficit, that amount will be made up (either as a credit to the tenant/airline, or as an extra charge the following year).

We can get really technical by getting into different types of rate making methodologies, such as compensatory, or residual, etc. but that's another topic.

I hope that helps with your understanding of how airports make their money. Sometimes it not as easy as "1, 2, 3" to increase revenues. It is a process. Using the processes I've detailed, it's kind of easy to see why, as an example, the PIT airport bosses would be a little jumpy about US cutting out on them.

Tom at MSY



"The criminal ineptitude makes you furious"-Bruce Springsteen, after seeing firsthand the damage from Hurricane Katrina
User currently offlineAcidradio From United States of America, joined Mar 2001, 1874 posts, RR: 10
Reply 10, posted (10 years 11 months 3 weeks 6 days 16 hours ago) and read 6866 times:
AIRLINERS.NET CREW
FORUM MODERATOR

Don't forget traffic and speeding tickets! MSP has started issuing quite a lot of speeding tickets lately. And when they tow a car, I'm sure they get a decent kickback too.


Ich haben zwei Platzspielen und ein Microphone
User currently offlineWestJetYYZ From , joined Dec 1969, posts, RR:
Reply 11, posted (10 years 11 months 3 weeks 6 days 16 hours ago) and read 6846 times:

Airport Improvement Fee seems to be the most popular, and must SURE create a lot of revenue, it's often arond 10$ CDN.... per passenger. That adds up VERY fast.

User currently offlineTom in NO From United States of America, joined Nov 1999, 7194 posts, RR: 33
Reply 12, posted (10 years 11 months 3 weeks 6 days 14 hours ago) and read 6818 times:

The AIF is to Canada what the PFC (Passenger Facility Charge, shown on my list) is to the United States. PFC's in the US are usually either $3 or $4.50, depending on the flight segment, and if the departure airport has an approved PFC.

Tom at MSY



"The criminal ineptitude makes you furious"-Bruce Springsteen, after seeing firsthand the damage from Hurricane Katrina
Top Of Page
Forum Index

This topic is archived and can not be replied to any more.

Printer friendly format

Similar topics:More similar topics...
How Do Runways Get Their Numbers? posted Sun Jul 2 2006 18:25:31 by Rolo987
How Do Airlines Make Their Wine Selections? posted Sat May 27 2006 21:14:54 by 777fan
How Do Airplanes Get Their Names? posted Sat Sep 3 2005 01:21:02 by CessnaLady
How Do Airports Handle Snow? posted Wed Mar 2 2005 15:22:50 by Mozart
How Do Airlines Pick Their Hubs? posted Sun Jul 11 2004 03:03:19 by BoeingPride800
How Do Runways Get Their Numbers? posted Wed Oct 29 2003 20:28:14 by EZYAirbus
How Do Pilots Calculate Their Pay? posted Sun Aug 17 2003 16:05:40 by N6376m
Iberia - How Do They Recruit Their Pilots? posted Sun May 25 2003 12:29:52 by DoorsToManual
How Do Airlines Schedule Their Aircraft? posted Thu Oct 24 2002 07:38:30 by Spark
How Do Airliners Get Their Names? Ex Boeing 747 posted Mon May 13 2002 17:30:47 by TransatGuy