Data has the power to lead airports down a path to new revenue sources even while the aviation market is in a retraction. The majority of airport revenues are derived from aeronautical means such as terminal, landing and passenger fees paid by airlines.

Numbers will vary by source and geography, but in general the aeronautical revenue range is considered between 55% and 65%, with the remaining revenues coming from nonaeronautical sources such as retail, parking and advertising. Typically, nonaeronautical revenue is directly correlated to passenger traffic — although there are other sources that are not directly related, such as property and real estate investments, energy farms, commercial development, oil and gas production, etc.

In periods of rapid market growth, airports care about growing nonaeronautical revenues as a means of capital funding and lowered fees for airlines. During market contraction, as we’ve experienced in the midst of the COVID-19 pandemic, the topic of revenue generation shifts toward offsetting operating expenses. In all instances, an airport needs a plan that includes a diversity of sources.

Airports have a well-documented history of strength and capability in managing physical assets — real estate, terminal facilities, runways — and planning for periods of growth, stability or contraction. Budgeting cycles and funding sources are well understood within the confines of a discussion centered on managing physical assets. 

In the aviation environment, exploration on the frontier of physical asset management may be mature, but the use and understanding of data as an asset is still largely untouched. Greater wireless connectivity paired with data sources can provide much-needed revenue streams. In retail markets, data is king, and the spoils of e-commerce belong to those who understand and leverage the data available to them. 

This is especially true within the realm of advertising. The ability to correlate print and digital advertising to retail spend is valuable in all markets, including aviation. Airports have opportunities to increase nonaeronautical revenues through digital advertising in unprecedented ways with thoughtful planning of networks and ubiquitous connectivity.    

Current wireless and cellular network capabilities offer airports many opportunities to facilitate a transformation that includes collecting data about physical assets and collecting data on how passengers interact with their physical surroundings. Today’s 5G network connectivity and developing Wi-Fi 6 standards can provide the infrastructure needed to accomplish that transformation. Without that infrastructure it may be hard to attract application developers to consider new use cases, and it will be difficult to convince advertisers that they can reach their desired demographics. It will also be very challenging for the airport to connect with the passenger in meaningful ways, and to deliver an immersive experience that today’s traveler expects.

Consider a traditional bank of flight display monitors. These are often deployed at key locations where passengers intuitively are moving from one area to another, for example, after a security screening checkpoint as passengers begin walking toward gates. Advertisers know passengers use these displays, but they may not know how many passengers, their frequency and dwell times, and how many passengers walk by without using them. If the airport knew that the display banks were used more often during early mornings than at any other time, for example, it could target breakfast advertising and expect a premium for that market.  

Alternatively, data can help bolster traditional nonaeronautical revenue sources. An airport’s concessions program knows how much money was spent at a specific retailer storefront — a coffee shop, for example. But does the airport know how many people approached the coffee shop, saw the queues and then decided to go elsewhere?

Gross receipts for the previous month serve as data points, but knowing the volume of lost customers is information, and information can lead to better financial decisions by management. This information is available with the appropriate application software, sensors and cameras, but these require connectivity and bandwidth, which in turn requires infrastructure.

 

In the face of disruption, the important role that technology plays is becoming clear. Airports and airlines alike can benefit greatly from adoption of the most up-to-date technologies, like 5G.

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Stu Garrett specializes in aviation information technology and special systems. He has more than 17 years of experience in enhancing 16 of the world’s largest airports, helping clients find new technology solutions that provide passenger convenience and operational efficiency.