AIRPORT REVENUE in Turbulent Times
| BY ROBERT FINE, Manager of Economic Development Central Okanagan Regional District
New Developments
t’s easy to see how airports have played a significant role in globalization by continuously connecting cities, countries and continents, making the globe truly accessible. Even more obvious is the economic impact airports have on communities. Airports play a prominent role in the economic development of a region as well as nations, supporting the rapid movement of goods, peoples and services while fostering trade, investment and commerce.
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A number of studies have demonstrated the economic value of Kelowna International Airport and the vital contribution it makes to the economic prosperity of the Okanagan Valley. Kelowna International Airport represents an employment cluster of nearly 2,000 jobs and $310 million in economic activity annually. When one thinks of airports and economic impact, the tendency is to think about the basic elements of planes landing, what passengers spend and other air-side activities such as aircraft maintenance, but not the operation of the airport itself. A recent study undertaken by the Air Transport Research Society headquarters at the University of British Columbia’s Sauder School of Business suggests a different way of looking at airports.
The report, released this past summer, reveals that non-aeronautical revenue streams have contributed to greater efficiencies allowing airports to reduce their landing fees and attract more aviation-related business. The study looked at 142 airports in North America, Europe and the Asia Pacific region and saw an increase in the diversity of non- aviation revenue sources ranging from parking and retail operations to real estate development and golf courses. In turbulent economic times, the report stresses,
non-aviation revenue can become more important.
This ninth annual report ranks airports in terms of efficiency as demonstrated by the percentage of revenue generated from non-aviation related activities. The most efficient airport in North America was Atlanta’s Hartsfield Jackson airport which generated 58 percent of its total revenue from other sources. Atlanta’s diverse revenue streams allow the airport to offer some of the lowest landing fees in the world, making it one of North America’s most attractive hub destinations. When landing fees are kept low it keeps airfares low and in turn usually means more flights to more destinations. This is the eighth time Hartsfield Jackson has lead the study, adding to recent accolades including Best Convenience Retail Program, Airport Revenue News magazine’s Best Concessions Management Team; Air Cargo World magazine’s Award of Excellence for best North American cargo operations and World Air Cargo Award for Airport of the Year (2009 & 2010).
The lowest ranked North American airport was Miami, which derived just 30 percent of its income from alternative sources. In Canada, Vancouver was recognized for its efficiency, placing fifth in North America in the large airport category. Among Canada’s smaller airports, Edmonton, Calgary and Ottawa were the highest ranked; Edmonton edged out 2009 winner Calgary by increasing non-aeronautical revenue by 144 percent between 2001 and 2008. YLW was not part of the study but continues to work to become more efficient, while increasing customer satisfaction. With the rapid passenger expansion and the development plans presented, perhaps Kelowna International Airport will appear in the UBC analysis soon.
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