Covid-19 pushing airports to diversify into non-passenger related revenues

posted on 20th July 2020 by Eddie Saunders
Covid-19 pushing airports to diversify into non-passenger related revenues

As passenger numbers fall in the wake of COVID-19, a new white paper by world-leading airport consultancy, NACO, makes the case for airport real estate and non-passenger related revenues as key to resilience – and a vision of the future.

 

The paper reports that, with almost 90% of airports revenues being passenger-related, there is a clear need for airports to diversify their revenue streams in order to reduce both revenue volatility and the immediate negative effects of declining passenger traffic on their business.

 

The white paper is being published by world-leading airport consultancy and engineering firm, NACO (Netherlands Airport Consultants), which has over 70 years’ experience working on more than 600 airports in over 100 countries around the world. The paper brings together research and wide-ranging data compiled by NACO, a company of international engineering consultancy Royal HaskoningDHV.

 

Speaking about the reasoning behind the white paper, Pieter van der Horst, Airport City Development Expert at NACO said: “We are approaching what would have been the busiest days of the year for major airports like Schiphol and others across Europe and the world – which are now close to empty as fleets are grounded, flights cancelled and many nations across the world are still in various stages of lockdown.

 

“Our white paper explores the impact of these closures, and specifically, the data indicating how airport real estate and non-passenger related revenues have been essential in cushioning the impact of the economic downturn.”

 

The paper finds that following the immediate impact of the pandemic, the almost total contraction in passenger-related revenues has led to a near evaporation of earnings for airports. This in turn will make post-crisis levels structurally lower for years to come and change the landscape of the aviation industry.

 

Van der Horst continues: “We see three developments at play which strengthen the case for diversification in non-passenger related revenues. Firstly, the pre-pandemic trend of decreasing retail revenues per passenger; secondly, major uncertainty around recovery of air travel; and finally, the introduction of green taxes and conditions for government support to airlines which add to the uncertainty.”