DTWNWA
Topic Author
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How Do Airports Increase Their Revenue?

Sat Aug 09, 2003 12:33 am

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?
 
bigphilnyc
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Joined: Sat Jan 19, 2002 10:43 pm

RE: How Do Airports Increase Their Revenue?

Sat Aug 09, 2003 12:43 am

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.
 
luv2fly
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Joined: Tue May 13, 2003 2:57 am

RE: How Do Airports Increase Their Revenue?

Sat Aug 09, 2003 12:46 am

Advertising, like the signs posted as you walk to your gates for one.
You can cut the irony with a knife
 
Greg
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RE: How Do Airports Increase Their Revenue?

Sat Aug 09, 2003 12:59 am

The easiest way: charge a passenger handling tax or fee.
 
ren41
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RE: How Do Airports Increase Their Revenue?

Sat Aug 09, 2003 1:02 am

Also landing fees

R41
 
rajivvyas
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RE: How Do Airports Increase Their Revenue?

Sat Aug 09, 2003 1:09 am

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.

 
Tom in NO
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Joined: Thu Nov 11, 1999 10:10 am

RE: How Do Airports Increase Their Revenue?

Sat Aug 09, 2003 1:18 am

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
 
Continental
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RE: How Do Airports Increase Their Revenue?

Sat Aug 09, 2003 1:47 am

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
 
pinsent
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Joined: Fri Jul 06, 2001 10:22 pm

RE: How Do Airports Increase Their Revenue?

Sat Aug 09, 2003 2:09 am

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
 
Tom in NO
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Joined: Thu Nov 11, 1999 10:10 am

RE: How Do Airports Increase Their Revenue?

Sat Aug 09, 2003 2:24 am

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
 
acidradio
Crew
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RE: How Do Airports Increase Their Revenue?

Sat Aug 09, 2003 3:11 am

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
 
Guest

RE: How Do Airports Increase Their Revenue?

Sat Aug 09, 2003 3:48 am

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.
 
Tom in NO
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Joined: Thu Nov 11, 1999 10:10 am

RE: How Do Airports Increase Their Revenue?

Sat Aug 09, 2003 5:18 am

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