New Business Approach Underlines Emergence of Airports as Attractive Business Centres

May 23, 2006

London, U.K. — Airports are becoming profitable business enterprises based on the increasing revenues generated by non-aeronautical commercial activities, in particular, retailing, car parking and catering. This trend is opening up opportunities for airport management firms and other companies keen on expanding their businesses in the catchment area of airports.

Currently, due to the demand from air carriers for the reduction of charges and the unwillingness of governments to offer subsidises, airports can no longer rely solely on aeronautical revenues to generate the resources needed for infrastructural improvements.

“Here, commercial revenues from retailers, advertisements, ground transport and property development offer a huge boost to infrastructural investments and even to directly generate profits,” notes Frost & Sullivan (http://www.aerospace.frost.com) Research Analyst Kamila Zlobinska

The growing diversification of airports’ revenue sources reflects their stronger integration into the economies in which they operate. Airports have become attractive business centres and are supporting economic growth in the areas where they are located.

“The importance of non-aeronautical revenues is a good indicator of the new model of business-oriented airport operators entering the industry and the growing importance being given to customer service,” says Ms. Zlobinska. “As a result, airports are now increasingly seen not only as air-service providers but also as potential providers of multiple commercial opportunities such as shopping and entertainment.”

However, airport operators eager to succeed in the marketplace will have to demonstrate competencies in core airport operations, such as technical operations, facility management or safety, besides the management of traditional airport activities such as airport planning.

Ultimately, the challenge will be to build an organisation able to achieve better economic returns. Success in a globalised and highly competitive airport industry will require marketing and new business development skills beyond those that currently exist in the industry.

“An enhanced commercial approach will determine future industry development,” says Ms. Zlobinska. “The establishment of more airport management firms, the expansion of capital expenditure and value chain deregulation will also influence the dynamics of the global airport industry in the long term.”

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World Airports - Financial Evolution and Market Dynamics

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