U.S. airports generate revenue after losing billions during pandemic – Skift
Despite relief from Congress, the country’s commercial airports are suffering 13 months after Covid-19 hit airlines and the travel industry. Terminals that once buzzed with travelers are now echo chambers, and while it’s a cinch for passengers to pass, it’s a huge loss of revenue for airports.
Airports Council International-North America (ACI-NA), the trade group representing commercial airports in the United States and Canada, predicts that airports in North America will lose $ 40 billion for the two-year period between March 2020 and March 2022.
“These growing losses, coupled with rising operating costs, will prevent airports from investing in much-needed infrastructure projects, as they continue to foot the bill for significant improvements to health facilities and practices and safety measures to limit the spread of Covid, ”said ACI-NA President Kevin M. Burke.
So how do airports manage? Skift has reached out to airports in the United States to see what each is doing to generate revenue. Here’s a look at how four airports are creatively increasing their revenues during the pandemic.
Cincinnati / Northern Kentucky Airport focused on new technologies and innovative approaches to improve the traveler experience, create efficiencies for business partners, increase revenues and reduce costs. The airport innovation team is examining various opportunities for new sources of revenue and revenue sharing through partnerships with startups, universities and more, said airport spokesperson Mindy Kershner.
Cincinnati Airport generates revenue by focusing on e-commerce and air cargo, which has seen 38% year-over-year growth for the first two months of 2021 (252,509 tonnes) and 15 % year-over-year in 2020, (1.4 million tonnes), Kershner said.
“We have diversified our operations over the past five to ten years with a strategic focus on recruiting and supporting air cargo carriers for their growth and development. We are in a unique position as the headquarters of two air cargo hubs: DHL Express Global Superhub of the Americas as well as Amazon’s Air Hub, ”said Kershner. “The shift to e-commerce during the pandemic and the continued growth of air cargo has been critical in protecting aviation revenue streams during this lull in passenger traffic.”
Another goal of the airport is the development of the land and the attempt to secure long-term leases for tenants and developers, she said.
“Rather than selling land for a single price, these leases generate long-term income for the airport. It has been successful with over 200 acres of land developed by multiple tenants since 2015 alone, ”Kershner said.
In California’s Bay Area, golf is king at Oakland International Airport.
Roberto Bernardo, an airport spokesperson, cited an example of a company that performed well during the pandemic: Metropolitan Golf Links golf course, located on the airport grounds. “Golf has been one of the most popular outdoor recreation opportunities available throughout the pandemic,” he said.
Bernardo said the forecast revenue for the Port of Oakland generated by Metropolitan Golf Links, operated by Oakland Golf and located on property owned by the airport, is $ 224,000 for fiscal year 2020-2021. In an agreement with the city of Oakland, to which the Port of Oakland leases the land, the two shared equally the profits generated from the rent.
In New Mexico, the Albuquerque International Sunport is focused on non-aviation revenue, including leasing undeveloped land at the airport to fill the lost revenue gap and bring jobs back to the community, said Jonathan Small, an airport spokesperson.
“Another program that we have developed to help generate non-aviation revenue is a new internal advertising program. We saw an opportunity to integrate the program internally and receive 100% of the income with the assets we currently own, without having to make a substantial capital investment, ”Small said.
Small said they had to be creative in costing and avoiding layoffs.
“In some cases, we have reallocated resources to take advantage of other areas of opportunity. Land use planning is a prime example. The Sunport has quite a bit of land around the airport itself, so we’ve stepped up our efforts to promote and lease various plots of land, ”Small said. “We currently have several important agreements underway, which will not only generate income for us, but corresponding developments on these lands will provide massive economic momentum to our community and the entire state of New Mexico.”
Small said the airport has several commercial properties all of which are currently leased or in the process of being leased. In addition, it has agreements with a hotel and four off-site parking lots that generate revenue.
Although Small declined to provide specific revenue figures due to ongoing land and advertising deals, he acknowledged that non-aeronautical revenue helps offset lost revenue.
Donuts, Toyotas and Trump
Palm Beach International Airport (PBI) also creatively uses the land it owns to generate revenue.
“PBI continues to experience significant revenue losses from our dealerships, variable airline fees and parking over the past year. That being said, PBI has a diverse revenue stream, including several offsite business developments such as two hotels, a Toyota dealership, warehouses and the Drive Shack, ”said Lacy Larson, airport spokesperson.
In addition, the airport leases land from a career resource center and it has 30-year long-term leases to Dunkin ‘Donuts / 7-Eleven which besides the rent also pays the airport, 0005. cents per gallon of gasoline sold. In addition, the Trump International Golf Course is located on the airport grounds.
Trump International’s lease, which is due for renewal in 2029, has two renewal clauses, totaling a 75-year lease, Larson said.
Long-term non-aircraft leasing generates variable annual revenue of $ 4,008,911 for the airport.
“In addition to off-site commercial real estate, our general aviation acts as an important source of revenue. Examples of general aviation revenue include landing fees, fuel (flow) and leases, ”Larson said. “In addition, the Palm Beach County Airports Department includes three general aviation airports, with general aviation at PBI being the most powerful.”
Photo credit: Palm Beach International Airport at night overlooking its leased land in West Palm Beach, Florida. Palm Beach International Airport