Ruth Haines
Airports have a variety of methods to generate revenue from airline passengers. Aeronautical revenue, which includes landing fees, passenger fees, terminal fees, and usage fees, is a significant component of an airport's income. Airports also earn money from airline tenants, who pay rent for various facilities. Additionally, airports generate income from food and beverage sales, retail, advertising, and special events. Airports can also receive income from car rental commissions and parking fees. Last-minute bookings and stranded families can be a profitable source of income for airlines.
| Characteristics | Values |
|---|---|
| Aeronautical revenue | Landing fees, passenger fees, terminal fees, usage fees (for aspects like gates and ground services) |
| Non-aeronautical revenue | Food and beverage sales, airport retail, advertising space, sponsored spaces, special events, branded areas |
| Fees and rents | Landing fees, hanger use fees, rent for airline and car rental offices, parking fees |
| Government grants and support | Bipartisan infrastructure law, grants through the Airport Improvement Program |
| Income from slots | Limited number of slots at congested airports can cause prices to reach tens of millions of dollars |
| Income from desperate last-minute passengers | Higher profit from stranded families |
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What You'll Learn
- Aeronautical revenue: fees charged to airlines and passengers for using airport space
- Non-aeronautical revenue: income from food, beverages, and retail
- Advertising and sponsorships: selling advertising space and branded areas
- Parking fees: charging for parking, including covered parking options
- Additional services: commissions from car rentals and other services
Aeronautical revenue: fees charged to airlines and passengers for using airport space
Airports can generate revenue by charging fees to airlines and passengers for using airport space and facilities. This is known as aeronautical revenue, which constitutes the majority of an airport's income. Here are some ways airports can make money off of families through aeronautical revenue:
Landing Fees
Airports charge airlines fees for the landing of aircraft. These fees are typically based on the weight of the plane, with larger aircraft paying higher fees due to their greater impact on runway wear and tear and their requirement for more parking space.
Passenger Fees
Airports may charge passengers directly for using their facilities. For example, the Newport News-Williamsburg International Airport levies a "Development Fee" on each departing passenger. In the United States, this type of fee is known as the Passenger Facility Charge (PFC) and is capped at around $5 by the government.
Terminal Fees
Airlines are required to pay fees for the use of terminal space, including counters and gates. These fees provide airlines with exclusive access to specific areas within the airport.
Usage Fees
Airports charge airlines for the usage of various services and facilities, including gates, ground services, training facilities, storage facilities, hangars, offices, and maintenance facilities. These fees are typically structured based on the number of passengers handled by the airline and the specific services required.
Parking Fees
Airports generate revenue by charging parking fees for both aircraft and passenger vehicles. Aircraft parking fees are based on the amount of space required, while passenger vehicle parking can provide an additional income stream, especially if covered parking options are available.
Retail and Food Services
While not directly related to fees charged for using airport space, airports generate significant revenue through retail and food and beverage sales. Airports have expanded beyond traditional options, now offering designer clothing, local goods, and a variety of dining choices. This has transformed terminals into "travel megastores," providing a more diverse and appealing experience for passengers.
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Non-aeronautical revenue: income from food, beverages, and retail
Airport revenues can be divided into aeronautical and non-aeronautical sources. Aeronautical revenue, which comprises the majority of airport income, includes airline terminal space rentals, airline landing fees, and usage fees for terminals, gates, services, and passenger counts. Non-aeronautical revenue, on the other hand, includes income from food, beverages, and retail.
In recent years, airports have been expanding their food and beverage options beyond national franchisers to include local restaurants and vendors. This strategy has proven to be lucrative, with U.S. airports generating $587 million from food and beverage sales in 2013, accounting for about 7.2% of non-aeronautical revenue.
Airport retail has also evolved, offering a wider variety of products beyond just chocolate bars and magazines. Designer clothing, locally produced goods, and even automated retail units (upscale vending machines) have transformed airport terminals into "travel megastores." These retail units are especially useful in smaller locations that would be too compact for regular stores. According to a 2015 report by Verdict, a research and analysis company, worldwide airport retail sales were projected to continue growing through at least 2020, driven by rising passenger traffic and an improving economy.
In addition to food, beverages, and retail, airports also generate non-aeronautical revenue by selling advertising space inside and outside terminals, as well as through sponsored spaces, special events, and branded areas that enhance the airport ambiance and passenger experience.
By diversifying their non-aeronautical revenue streams, airports can not only increase their income but also provide a more enjoyable and convenient experience for families and all types of travellers passing through.
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Advertising and sponsorships: selling advertising space and branded areas
Advertising and sponsorships are a significant source of non-aeronautical revenue for airports, and they can sell advertising space in various ways to increase their income.
Firstly, airports can sell advertising space on external billboards, which are highly visible to all inbound and outbound commuter traffic. These large-scale, LED digital billboards are an effective way to capture the attention of travellers and promote various products and services.
Airports can also offer advertising opportunities within the airport terminals themselves. This includes traditional billboard advertisements, as well as more innovative options such as interactive digital screens and even "upscale vending machines" that provide 24/7 access to a range of products. Airports can further enhance the impact of these indoor advertisements by utilising digital indoor mapping technology, which provides real-time passenger navigation and facilitates targeted advertising based on passenger trends and behaviours.
Additionally, airports can offer sponsorship opportunities for initiatives or events that are directly related to the airport and the aviation industry. For example, sponsorships can be used to promote competition at the airport, raise awareness of airport facilities and services, or promote air service and travel using the airport. Airports may have specific requirements for sponsorships, such as including media or presentation opportunities that showcase the airport's involvement and highlight its services to the audience.
By embracing these diverse advertising and sponsorship avenues, airports can effectively monetise their spaces, improve their ambiance, and enhance the overall passenger experience.
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Parking fees: charging for parking, including covered parking options
Parking fees are a significant revenue stream for airports, with airlines and passengers paying for parking. Airports can charge a premium for parking that is closer to the terminal, with covered parking options also available for a higher fee.
Some airports, such as Phoenix Sky Harbor International Airport, offer free 24-hour cell phone waiting lots where drivers can wait in their vehicles for passengers to deplane, pick up their luggage, and be picked up at a designated ground transportation area. These lots have electronic flight information displays and portable restrooms, ensuring a basic level of comfort for those waiting. However, drivers must stay in their vehicles, and unattended vehicles may be towed or fined.
Denver International Airport (DEN) offers a similar service with its free Final Approach cell phone waiting lot. DEN also provides accessible parking in all airport parking facilities, except Level 3 of the garage, with spaces located near the terminal in the west and east garages. Additionally, wheelchair or electric cart services are available from the airlines.
Other airports, such as San Diego International Airport (SAN), have much higher parking fees, with an average full-day rate of $38 for economy parking. On the other hand, Kansas City International Airport (MCI) offers a more affordable option, with an average daily rate of $7.50.
Airports can also encourage the use of parking services by offering loyalty programs, allowing customers to earn points with each parking reservation. This strategy helps to build customer loyalty and can result in increased parking revenue over time.
By providing a range of parking options, from free waiting lots to premium covered parking, airports can cater to different passenger needs and maximize their revenue from parking fees.
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Additional services: commissions from car rentals and other services
Airports can generate revenue by offering additional services and earning commissions from car rentals and other services. Airports charge fees and rents for the use of their facilities, such as landing fees, hangar use, and parking fees. They also lease space to airlines and car rental companies, earning rent from these tenants.
Car rental services are a significant source of income for airports. Airports often receive a commission for each car rental that occurs on their premises. This provides an incentive for airports to promote and facilitate car rentals for travellers, including families. By offering a range of car rental options and convenient booking services, airports can increase their commission earnings.
In addition to car rentals, airports can generate revenue from various other services. For example, airports can offer advertising space, sponsored areas, and special events, providing additional income streams while also enhancing the airport ambiance and passenger experience. Airports can also establish commercial projects on their property, such as office buildings, retail centres, and hotels, which can boost non-aeronautical revenue.
Furthermore, airports can partner with a variety of vendors and concessionaires to offer an array of food and beverage options, including local restaurants and vendors. This diversification of dining choices has proven profitable, with U.S. airports generating $587 million from food and beverage sales in 2013, accounting for about 7.2% of non-aeronautical revenue.
By leveraging these additional services and commissions, airports can significantly increase their revenue and provide travellers, including families, with a more comprehensive range of offerings and an improved overall experience.
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Frequently asked questions
Airports make money off of families through various fees and charges. These include landing fees, passenger fees, terminal fees, and usage fees for things like gates and ground services. Airports also generate revenue through food and beverage sales, retail, advertising, and parking fees.
Usage fees at airports can include charges for using gates, ground services, and parking. Airports may also charge airlines for each passenger and the services required to handle them.
Aeronautical revenue, which includes income from airlines and their passengers, accounts for a significant portion of an airport's total revenue. In 2013, US airports generated around $10 billion in aeronautical revenue, comprising about 55% of their total operating revenue.
Yes, airports are increasingly focusing on expanding their retail and food and beverage offerings to boost non-aeronautical revenue streams. Airports can also generate income by selling advertising space inside and outside terminals.
Airports have been exploring innovative ways to increase revenue. For example, Singapore Changi Airport opened its doors to non-traveling Singaporeans to encourage visits to its outlets. Airports also generate income from slot allocations, which can be lucrative at congested airports.
