Ruth Haines
Airports are becoming increasingly commercial as they seek to improve their profitability and sustainability in a rapidly evolving retail environment. Airports are important economic drivers, creating jobs, increasing incomes, and attracting foreign investment. With the growth of e-commerce and shifting customer preferences, airports are exploring new revenue streams, such as leasing airport facilities, converting unused land into e-commerce hubs, and developing airport cities with shopping centres, entertainment complexes, and hotels. Airports are also enhancing the passenger experience with comfortable lounges, diverse food and beverage options, and technology-driven services, while also leveraging advertising opportunities. These commercial activities are crucial to the success of airports, especially in the post-pandemic era, as they adapt to changing trends and passenger spending habits.
| Characteristics | Values |
|---|---|
| Commercial activities | Retail, food and beverage outlets, e-commerce, advertising, leasing airport facilities, etc. |
| Increase in revenues | Non-aeronautical revenues are becoming more important, with airports pursuing partnerships and leasing out retail spaces. |
| Improved passenger experience | Comfortable lounges, free Wi-Fi, virtual queuing, on-demand services, etc. |
| Job creation | Airports are major job providers, with a diverse workforce, and also boost local economies. |
| Community support | Airports play an important role in the community, driving economic activity and infrastructure growth in the surrounding regions. |
| Sustainability | Airports are investing in solar farms and sustainable aviation fuels to meet sustainability targets. |
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What You'll Learn
- Airports are becoming destinations in their own right, with retail, leisure, and dining experiences
- Airports are increasingly catering to specific customer segments with tailored products and services
- Airports are pursuing new partnerships with local businesses and universities to diversify revenue streams
- Airports are becoming more sustainable, with solar farms and electric aircraft
- Airports are investing in new technologies to improve the passenger experience and manage facilities
Airports are becoming destinations in their own right, with retail, leisure, and dining experiences
Retail is a significant aspect of this transformation. Airports are expanding their commercial offerings to include diverse retail spaces, from luxury brands to local specialties. Singapore's Changi Airport, for instance, boasts an extensive retail area, while Schiphol Amsterdam Airport showcases Dutch cheeses and local brands. Airports are also leveraging digital tools, with Istanbul Airport offering online shopping with pickup upon arrival, and London Heathrow promoting duty-free products through social media.
Leisure and entertainment options are also on the rise. Airports are investing in building wider networks of interconnected businesses, creating "aerotropolises" with shopping centres, entertainment complexes, and event arenas. Asia leads this trend, with China incorporating these principles in over a hundred airports. Singapore's Changi Airport features "Jewel," a dome-shaped attraction offering retail, leisure, garden, and hotel amenities.
Dining experiences are also evolving. Airports are responding to shifting customer preferences and demographics, offering diverse food and beverage outlets to cater to various tastes and dietary needs. Comfortable lounges and free Wi-Fi are also becoming essential for travellers, who increasingly value seamless and customised experiences.
Beyond retail, leisure, and dining, airports are pursuing innovative strategies to enhance their commercial performance. These include partnerships with local businesses, tourism agencies, and universities, as well as converting unused land into solar farms or e-commerce hubs. By diversifying their offerings, airports are transforming into destinations that cater to a wide range of traveller needs and preferences.
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Airports are increasingly catering to specific customer segments with tailored products and services
To address shifts in customer preferences and the rise of e-commerce, airports are pursuing new strategies to boost passenger retail engagement and spending. For example, Istanbul Airport enables passengers to shop online and pick up their purchases upon arrival, while London Heathrow uses social media to promote exclusive and duty-free products to digital-savvy travellers.
Airports are also exploring new ways of doing business through e-commerce platforms, offering on-demand experiences such as food and drink delivery. They are investing in building wider networks of interrelated businesses and activities to create "aerotropolis" metropolitan areas centered around the airport, including shopping centers, entertainment complexes, and even schools.
Additionally, airports are partnering with local universities, businesses, or incubators to lease facilities for testing and data collection, particularly in aviation-related technologies. They are also repurposing unused land for solar farms and logistics or e-commerce hubs to generate revenue and meet sustainability targets.
By focusing on specific customer segments and offering tailored products and services, airports aim to enhance the passenger experience, increase profitability, and drive economic growth in the surrounding regions.
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Airports are pursuing new partnerships with local businesses and universities to diversify revenue streams
Airports are increasingly pursuing new partnerships with local businesses and universities to diversify their revenue streams. This strategy is particularly relevant as airports seek to enhance their non-aeronautical revenue streams, which have become crucial to their profitability.
One way airports are doing this is by partnering with local businesses to offer a wider range of services to passengers. For example, some airports provide transportation to and from the airport, home-to-hotel pickup, baggage delivery, and partnerships with tourism agencies and attractions. Airports are also functioning as malls, leasing out retail spaces to various businesses, including food and beverage outlets. This allows them to tap into different markets and increase their revenue potential.
In addition to partnerships with local businesses, airports are also collaborating with universities and research institutions. For instance, airports may lease their facilities for testing, observation, and data collection, particularly for technologies relevant to aviation, such as sustainable aviation fuels and electric vertical takeoff and landing (eVTOL) aircraft. This not only helps to diversify their revenue streams but also contributes to the development of innovative solutions for the aviation industry.
Furthermore, airports are exploring opportunities beyond their traditional aeronautical activities by converting unused real estate into logistics or e-commerce hubs. This diversification strategy has proven successful, with revenues from these hubs growing more quickly and consistently than passenger volumes. Airports are also repurposing parking facilities and unused land for alternative uses, such as solar farms, which help reduce electrical expenses and meet sustainability targets.
By pursuing these new partnerships and diversifying their revenue streams, airports are not only enhancing their financial performance but also contributing to the economic development of the regions they serve. These partnerships create job opportunities, increase incomes, and attract foreign investments, further amplifying the positive economic impact of airports on their surrounding communities.
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Airports are becoming more sustainable, with solar farms and electric aircraft
Airports are increasingly becoming more commercial, with a focus on enhancing the customer experience and driving economic activity in their regions. Airports are also becoming more sustainable, recognising the need to reduce their carbon footprint and meet sustainability targets.
One way in which airports are becoming more sustainable is through the utilisation of solar energy. Airports often have large areas of undeveloped land or flat roofs that are ideal for solar installations. By installing solar farms, airports can generate clean energy, reduce their carbon footprint, and create additional revenue streams through leasing land for renewable energy projects. This approach is already gaining traction, with around 20% of public airports in the US having adopted some form of solar power. Indianapolis International Airport, for example, is home to one of the largest airport-based solar farms in the world, generating enough power to supply 10,000 homes annually.
Vertical solar farms are also an innovative approach that is being embraced. Vertical photovoltaic (PV) systems can optimise space, reduce energy costs, and lower carbon emissions. Airports with large expanses of unused land, such as those around runways and taxiways, can install vertical solar farms without impacting air traffic. Frankfurt Airport, for example, has the world's largest vertical PV installation, generating 17.4 MW of power.
In addition to solar farms, airports are also exploring the use of sustainable aviation fuels (SAF) and electric aircraft. The aviation industry recognises the need to reduce aviation emissions, and electric aircraft are expected to grow in scale by 2040. Airports are also pursuing partnerships with local businesses and universities to lease facilities for testing and developing sustainable aviation technologies.
By embracing sustainability initiatives, airports are not only reducing their environmental impact but also enhancing their public image as leaders in sustainability and innovation. This strategic focus on sustainability and commercial effectiveness is shaping the airports of tomorrow, ensuring they remain key economic drivers and meet the changing demands of passengers.
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Airports are investing in new technologies to improve the passenger experience and manage facilities
Biometrics, big data, and other connected technologies are being used to improve the passenger experience and enable airports to manage facilities more efficiently. 5G technology will also play a role in improving the passenger experience by providing real-time flight updates and personalised directions to passengers' phones.
Some airports are also offering tailored products and services to cater to specific customer segments and preferences. For instance, Dubai and Changi airports have curated luxury retail and personalised services targeting premium travellers, while Schiphol Amsterdam Airport has adopted a more localised approach, featuring Dutch specialties.
Airports are also exploring new ways of doing business via e-commerce. For example, some airports offer on-demand experiences such as delivering food and drink, while others have converted unused land into logistics or e-commerce hubs. Additionally, some airports have partnered with local universities, businesses, or incubators to lease airport facilities for testing, observation, and data collection.
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Frequently asked questions
Airports are becoming more commercial as they are increasingly seen as key economic drivers, both locally and globally. Airports are no longer just transportation hubs, they are becoming destinations in their own right, with some even developing into 'aerotropolis' metropolitan areas.
An aerotropolis is a metropolitan area that is centred around an airport. These areas utilise land unsuitable for residential development by building shopping centres, entertainment complexes, health and recreation facilities, and even schools.
Airports are major job providers, creating between 2,000 and 4,000 jobs for every million passengers. They also contribute to government revenue through taxes, customs duties, and other fees, which can be reinvested in infrastructure, education, and public services.
Airports are increasingly focusing on the customer experience to increase commercial revenue. This includes providing comfortable lounges, diverse food and beverage outlets, and free Wi-Fi. Airports are also pursuing partnerships with local businesses and universities, and leasing out retail spaces.
Intelligent advertising in airports can enhance the overall passenger experience and increase profitability.
