Accelerating recovery with non-aeronautical revenue
Is non-aeronautical the key to airport recovery post-pandemic? We examine how airports can untap their existing non-aeronautical revenue streams.
The COVID-19 pandemic has come with many learnings for our industry, but we’d argue that one of the most important is the need to improve airport revenue management. While passenger numbers are beginning to increase, it’s still uncertain if spending will be what it once was. With this in mind, airports are wise to uncouple revenue growth from passenger growth and instead focus on diversification of non-aero activities.
Untapping non-aeronautical revenue streams and employing digital strategies are crucial in accelerating airport recovery and futureproofing against any other unexpected downturns in traffic. Here we’ll explore how it’s possible.
What does non-aeronautical revenue mean?
Airports have two main revenue streams. The first, aeronautical revenue, includes money made from passenger charges, airline terminal space and security rentals and airline landing and usage fees. The second non-aeronautical revenue is generated from retail, food and beverage concessions, parking, and other activities.
Recently, airports have begun diversifying non-aeronautical revenue streams to increase profits and ensure economic viability. During the pandemic, these non-aeronautical streams have enabled airports to survive and remain competitive, with some airports even using them to finance airport infrastructure.
One example is London Stansted Airport, which financed new terminal infrastructure using non-aeronautical revenue from its retail concessions. Passengers are attracted to a shiny new terminal, and with no extra cost for airlines, London Stansted has become an even more attractive airport to do business with.
Post-pandemic, the entire industry is doing its best to keep costs to a minimum and claw back profits. So, how can airports ensure they remain competitive and attractive to airlines, who definitely don’t want to pay more for airport charges? The answer lies in those all-important non-aeronautical activities.
What are non-aeronautical activities?
Non-aeronautical activities are considered alternative sources of income for airports. Still, you might be interested to hear that they account for around 40% of airports’ overall revenue on a global scale and up to 50% for some larger airports.
One of the primary sources of non-aeronautical revenue is duty-free shopping. The first ever duty-free store was opened in 1947 at Shannon Airport in Ireland, and since then, it has become a profitable worldwide industry. Other important airport revenue streams include airport parking, lounge, meeting room hire, airport tours and food and beverage.
How do airports increase non-aeronautical revenues?
We appreciate that most airports haven’t got the budget to invest billions of pounds in something new, so we propose tapping into the non-aeronautical revenue streams your airport already has.
Think about what’s currently bringing in revenue for your airport and how you can make more of it. And consider this – your revenue generating opportunities do not solely lie in the walls of your airport. Today’s passengers desire a seamless digital journey, where engagement with your airport is convenient. So, if you aren’t already, it’s time to make more of your airport ecommerce platform and ensure you’re using valuable personalised data to meet your customers’ developing needs and expectations. Wondering where to start? Here are a few non-aeronautical activities to focus on:
Duty-free and travel retail
Duty-free may be one of the most important non-aeronautical revenue streams for airports, but still, it’s not what it once was. In the past, passengers would wait to make duty-free purchases, knowing they’d be privy to massive discounts and unbeatable deals. Today, however, access to price comparison websites and large ecommerce players have given shoppers more choice than ever before, plus the added convenience of shopping online.
So what can you do to make duty-free more attractive? Digitalise it! Offering pre-book duty-free and travel retail via your airport ecommerce website is a fantastic way to give customers the fun, relaxing and unrestricted shopping experience they desire. Instead of cramming all of their duty-free shopping into a short time while they wait for their flight, they can browse products at their leisure, organise click and collection, or even choose gate delivery for added convenience.
And it doesn’t have to stop with duty-free. Airports can sell a whole host of retail products via their ecommerce platforms and make the most of valuable upsell and cross-sell opportunities. Using passengers’ booking data and purchase history to carefully curate personalised offers and drive targeted marketing emails to improve the passenger experience, increase awareness and, ultimately, unlock more non-aeronautical revenue.
Airport parking reservation software
Are you making the most of your online parking system? Optimising customer data and introducing revenue management and dynamic pricing models will help you generate even more revenue from airport parking reservations.
With Rezcomm’s advanced parking reservation software, you gain control over your entire parking operations, with a host of flexible tools enabling you to:
● Accept parking reservations via your ecommerce platform
● View live occupancy
● Manage car park capacity
● Create tailored offers
● Take instant action
Use dynamic pricing to make more from your airport parking without extending your infrastructure. For example, offer lower prices during off-peak hours to encourage passengers to park with you, and increase the prices during peak times to prevent overutilisation.
When your data shows your car park is likely to reach maximum capacity, consider running special offers with Ground Transportation partners to make bus, monorail, taxi and train travel more attractive. Again, this will help to increase non-aeronautical revenue and is easy to set up using Rezcomm’s parking reservation software.
Pre-book Food and Beverage
Maximise revenue from your airport’s bars, coffee shops and restaurants by offering pre-order Food and Beverage via your ecommerce website.
When customers make a booking, offer a cross-sell to increase awareness of your pre-order FAB service. Not only will they enjoy the time-saving benefits of pre-booking, but they may even be willing to accept a gate or lounge delivery upsell for an even more luxurious airport experience.
Airport lounge reservations
Tailor your passengers’ booking journey to include an airport lounge upsell. It’ll increase awareness, drive conversions and pave the way for other revenue-generating upsells (like a glass of champagne) and cross-sells like premium parking.
With Rezcomm’s pay-as-you-go reservation solution, it’s easy to take control of capacity and occupancy levels, avoid overbooking and enhance your passengers’ experience with personalised offers and upsells, ensuring you really make the most of this untapped revenue stream.
Airport entertainment and appointment scheduling
The modern-day airport is more than just a gateway for passengers to get from ground to plane. Instead, we see it as a city or a major hospitality and retail hub, where people not only go to jet off somewhere but have a good time.
With this in mind, it’s worth considering the experiences your airport offers passengers and whether they know about them. For example, can they book an appointment with a beautician to go on holiday looking and feeling their best? Can they book a personal shopper experience with their favourite designer brand?
Increase awareness of these unique experiences within your airport marketing and offer customers the convenience of pre-booking appointments directly from your ecommerce website. Work closely with your retail, leisure and hospitality partners to offer personalised discounts to drive more revenue.
Pre-bookable Fast Track at the airport
Post-pandemic passengers want a quick and seamless journey through the airport. They don’t want to waste time in queues when they could be chilling out in the lounge or spending money in your retail stores. And as we highlighted in our article ‘How Airport Digital Transformation Improves Passenger Satisfaction, Efficiency and Revenues,’ shorter queue times can positively affect passengers’ spending.
Today, many airports meet passengers’ needs by offering pre-bookable fast track tickets for security and immigration. Not only do airports unlock revenue from offering this premium service, but they also gain valuable booking data. With the addition of bespoke bundles, such as fast track with airport lounge access, there’s a whole host of ways to generate more revenue from previously untapped sources.
Loyalty & Reward schemes
Developing an airport loyalty and rewards scheme is a fantastic way to encourage passengers to become loyal to your brand and spend more money with your airport. And, if you think about it, it’s still untapping an existing revenue stream; it just happens to be your customers!
Retaining existing customers is seven times cheaper than acquiring new ones, so it makes sense post-pandemic to focus on bringing loyal passengers back to your airport. Work with your airport retail, food and beverage and even airline partners to make your reward scheme attractive to customers – after all, the more customers spend, the more you will all benefit.
Improving airport revenue management with better data
While we’re starting to see the light at the end of the tunnel with the COVID-19 pandemic, no one can rule out the possibility of similar events in the future. This uncertainty is why airports must improve their economic viability and futureproof their revenue streams with better management.
Getting to grips with revenue management will help you make better business decisions and unlock more revenue without increasing your infrastructure or the volume of products and services sold. But for it to work, you need good data and the means to understand, and act on, what that data is telling you.
Rezcomm provides a full suite of Business solutions designed to give you a 360-degree view of your airport operations, passenger profiles and revenue streams, with all the data you need at your fingertips to drive your business forward.
Unlock more non-aeronautical revenue with Rezcomm
Want to accelerate your airport’s recovery from the pandemic? The solutions lie in the non-aeronautical activities your airport is already conducting. It just takes a little thinking outside the box and courage to explore the benefits of digitalisation, ready and waiting for your airport.
For support in developing your airport ecommerce, parking reservations and digital marketing, look no further than Rezcomm. Our plug-and-play airport marketplace comprises a vast range of products designed to help you unlock more revenue for your airport. Download our brochure and book a meeting with our team to get started.