Branching out

With passenger numbers reducing by over 60% in 2020, and airport revenues falling by $125bn, diversification has become a hot topic in the aviation industry.

There are three main types of landside offer which are being considered by airports to generate revenue, each requiring different existing assets and infrastructure to encourage additional non-passenger footfall to the airport:

• Office and mixed-use

• Commercial

• Transportation

Over the next few weeks, we are publishing a series of Pragmatists which will evaluate each of these types of landside development and the role that the commercial offer (retail, F&B and services) can play.

To start the series this week, we examine the different user groups and occupiers who will decide the focus and scale of any new development.

Local residents
The logical starting point is to consider the size, density, and demographic composition of the local and regional catchment. This provides the widest scope of opportunity from a commercial perspective. However, the complexity and range of factors that will affect the ability to attract these users to the airport is vast: including the quality and affordability of transport links, competing developments and even local legislation limiting the development of competition.

Should these potential barriers be overcome, the range of the scale of development can be huge – from regional, or global attractions such as the Jewel (seen above), to more functional local convenience offers.

Local workers
A large local worker population provides a significant revenue opportunity, either targeting passengers as they commute to and from work, carrying out day-to-day chores, grabbing a quick bite at lunch or post-work socialising.

An aim of the development may be to develop a new ecosystem and business cluster, through the inclusion of office and hotel space, thus creating another on-site population. The benefits of the commercial offer are twofold: as well as the obvious benefit of additional spend from these users, it can attract tenants to the buildings, who may be attracted by reduced rents and proximity to transport links as well as the enjoyment its employees take from the wide variety of spaces and activities.

Airport workers
Airports have a huge workforce and their proximity to a development means they should not be overlooked when considering the scale and mix of any commercial and service offer. Providing a space in which workers can carry out day-to-day chores, exercise, relax and socialise will be seen as a huge benefit to the workforce.

Passengers
A significant proportion of passengers will use the same transport links as the other user groups, and so are likely to be exposed to, or at least have the capability of using any landside development. Whilst numbers are likely to be high, passengers may have limited interaction with the development, as operational processes still need to be cleared, and many will be aware that there will be a significant spending opportunity post security. Without at least one of the other user groups, a significant landside development is unlikely to be feasible.

Overall each potential user group will have a unique set of requirements and barriers that will either attract or prevent them from utilising any development. Identifying and understanding these is a key step in designing the most relevant offer for your airport.

Generally, these can be grouped into three categories:

1. Accessibility
2. Product
3. Environment

Ed Newton