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

Author

Listed:
  • 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.

Suggested Citation

  • Franz Fuerst & Sven Gross & Ulf Klose, "undated". "The Sky is the Limit? The Determinants and Constraints of European Airports' Commercial Revenues," Real Estate & Planning Working Papers rep-wp2010-14, Henley Business School, Reading University.
  • Handle: RePEc:rdg:repxwp:rep-wp2010-14
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    References listed on IDEAS

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    1. 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.
    2. repec:eee:touman:v:31:y:2010:i:6:p:788-796 is not listed on IDEAS
    3. 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.
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    6. 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.
    7. 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.
    8. 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.
    9. 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.
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    Citations

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    Cited by:

    1. repec:eee:trapol:v:61:y:2018:i:c:p:123-131 is not listed on IDEAS
    2. Tomová, Anna, 2016. "Are commercial revenues important to today's European air navigation service providers?," Journal of Air Transport Management, Elsevier, vol. 54(C), pages 80-87.
    3. Fasone, Vincenzo & Kofler, Lukas & Scuderi, Raffaele, 2016. "Business performance of airports: Non-aviation revenues and their determinants," Journal of Air Transport Management, Elsevier, vol. 53(C), pages 35-45.
    4. Del Chiappa, Giacomo & Martin, Juan Carlos & Roman, Concepcion, 2016. "Service quality of airports' food and beverage retailers. A fuzzy approach," Journal of Air Transport Management, Elsevier, vol. 53(C), pages 105-113.
    5. repec:eee:transa:v:101:y:2017:i:c:p:61-72 is not listed on IDEAS
    6. repec:eee:jaitra:v:69:y:2018:i:c:p:1-14 is not listed on IDEAS
    7. Ivaldi, Marc & Sokullu, Senay & Toru-Delibasi, Tuba, 2015. "Airport Prices in a Two-Sided Market Setting: Major US Airports," TSE Working Papers 15-587, Toulouse School of Economics (TSE).
    8. Abbruzzo, Antonino & Fasone, Vincenzo & Scuderi, Raffaele, 2016. "Operational and financial performance of Italian airport companies: A dynamic graphical model," Transport Policy, Elsevier, vol. 52(C), pages 231-237.

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