Aiming to deliver sustainable growth
A data workshop from Airports Council International (ACI) introduced by Moodie Insights Director Craig Mackie looked at the best way to sustainably approach anticipated air traffic growth in the coming years.
ACI World Airport Business Analytics Head Patrick Lucas presented ACI’s research showing forecasted CAGR of +4.2% for global passenger traffic over the next five years.
He added that in coming years the balance of global passenger traffic will shift further to the east, with Asia Pacific set to make up 46.2% of annual passenger traffic by 2040, a notable jump from the 35.5% it currently occupies. Similarly, traffic in Europe is expected to drop from 26.5% to 19.2%.
Director, ASQ, ACI World
Head, Airport Business Analytics, ACI World
Director, Moodie Insights
A background in numbers: Global passenger traffic is growing but the percentage share of non-aeronautical revenue for airports has not grown over time relative to aeronautical revenue
There are two myths governing airport revenues, Lucas argued. Firstly, most airports do not generate net profits and a positive return on invested capital; 66% of airports globally operate at a net loss, he said. This is because airports with fewer than 1 million passengers flying from them every year (80% of global airports) have substantially higher costs per passenger than larger airports. As a result, 93% of airports with fewer than 1 million passengers per year make a loss.
Secondly, Lucas said that the percentage share of non-aeronautical revenue for airports has not in fact grown over time relative to aeronautical revenue; on an annualised basis from 2005 to 2017, non-aeronautical revenue (+4.9%) was lower than aeronautical (+5.7%).
ACI World ASQ Director Dimitri Coll said that airports cannot work in silos to achieve maximum customer satisfaction. The onus is on all stakeholders to create positive emotional states, he added.
The balance of global passenger traffic is shifting further to the east: Asia Pacific held a 35.5% market share in 2018, rising to 46.2% in 2040
Airports with fewer than 1 million passengers flying from them every year have substantially higher costs per passenger than larger airports
Airport branding recognition shapes how customers feel at all stages of the journey through the airport. “This is why we need to understand our customer for every touchpoint of the journey,” Coll said.
Coll presented research that shows the positive impact of customer satisfaction on retail revenues. A +1% increase in retail space increases retail revenue by +0.2%, while airports that increase customer satisfaction by +1% increase retail revenues by +1.5%.
Coll and Lucas concluded that investing in a customer-centric airport experience achieved through airport employees was the key to delivering sustainable retail revenue growth.
Delivering a customer-centric airport experience will help drive growth
Otherwise, the share of non-aeronautical revenue will slide further
The Moodie Davitt eZine
Issue 271 | 19 November 2019
The Moodie Davitt eZine is published 20 times per year by The Moodie Davitt Report (Moodie International Ltd).
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