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The Sky is the Limit? The Determinants and Constraints of European Airports' Commercial Revenues

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  • Franz Fuerst

    ()
    (School of Real Estate & Planning, Henley Business School, University of Reading)

  • Sven Gross

    (University of Applied Sciences Harz)

  • Ulf Klose

    (Airport Real Estate)

Abstract

This study investigates the determinants of commercial and retail airport revenues as well as revenues from real estate operations. Cross-sectional OLS, 2SLS and robust regression models of European airports identify a number of significant drivers of airport revenues. Aviation revenues per passenger are mainly determined by the national income per capita in which the airport is located, the percentage of leisure travelers and the size of the airport proxied by total aviation revenues. Main drivers of commercial revenues per passenger include the total number of passengers passing through the airport, the ratio of commercial to total revenues, the national income, the share of domestic and leisure travelers and the total number of flights. These results are in line with previous findings of a negative influence of business travelers on commercial revenues per passenger. We also find that a high amount of retail space per passenger is generally associated with lower commercial revenues per square meter confirming decreasing marginal revenue effects. Real estate revenues per passenger are positively associated with national income per capita at airport location, share of intra-EU passengers and percent delayed flights. Overall, aviation and non-aviation revenues appear to be strongly interlinked, underlining the potential for a comprehensive airport management strategy above and beyond mere cost minimization of the aviation sector.

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Bibliographic Info

Paper provided by Henley Business School, Reading University in its series Real Estate & Planning Working Papers with number rep-wp2010-14.

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Handle: RePEc:rdg:repxwp:rep-wp2010-14

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Web page: http://www.henley.reading.ac.uk/
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Keywords: Commercial revenues; non-aviation activities; European airports; regression analysis;

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  1. Appold, Stephen J. & Kasarda, John D., 2006. "The appropriate scale of US airport retail activities," Journal of Air Transport Management, Elsevier, vol. 12(6), pages 277-287.
  2. Gillen, David & Lall, Ashish, 2004. "Competitive advantage of low-cost carriers: some implications for airports," Journal of Air Transport Management, Elsevier, vol. 10(1), pages 41-50.
  3. Freathy, Paul, 2004. "The commercialisation of European airports: successful strategies in a decade of turbulence?," Journal of Air Transport Management, Elsevier, vol. 10(3), pages 191-197.
  4. Torres, E. & Domínguez, J.S. & Valdés, L. & Aza, R., 2005. "Passenger waiting time in an airport and expenditure carried out in the commercial area," Journal of Air Transport Management, Elsevier, vol. 11(6), pages 363-367.
  5. Zhang, Anming & Zhang, Yimin, 1997. "Concession revenue and optimal airport pricing," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 33(4), pages 287-296, December.
  6. Papatheodorou, Andreas & Lei, Zheng, 2006. "Leisure travel in Europe and airline business models: A study of regional airports in Great Britain," Journal of Air Transport Management, Elsevier, vol. 12(1), pages 47-52.
  7. Hsu, Chaug-Ing & Chao, Ching-Cheng, 2005. "Space allocation for commercial activities at international passenger terminals," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 41(1), pages 29-51, January.
  8. Morrison, William G., 2009. "Real estate, factory outlets and bricks: A note on non-aeronautical activities at commercial airports," Journal of Air Transport Management, Elsevier, vol. 15(3), pages 112-115.
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