Article: How Airports Make Money

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How Airports Make Money is an article written by AFF editorial staff:

www.australianfrequentflyer.com.au

How Airports Make Money

The largest source of airport revenue is passenger & security fees, which are included in the cost of every plane ticket.
www.australianfrequentflyer.com.au www.australianfrequentflyer.com.au

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When airports were privatised in the 1990s, I worked on an M&A team for one of the prospective buyers. Was amazing, the tricks and lurks of how Airports maximised revenue. You really wanted Korean airlines. Korean passagers, at at least then, spent by far the highest amount of duty free per capita, of any nationality. The airports get a cut of the duty-free take.

One time, in a meeting, we were discussing Brisbane Airport. At that time SkyTrain was just been built and the ( overseas) client enquired whether they could stop the Air train from actually stopping at the airport. There was a puzzled silence but eventually, someone asked why you would want to stop the 'AirTrain' from stopping at the airport. 😳 Answer was :taxi concession revenue. If everyone caught the train, there wouldn’t be as much taxi traffic, and the taxi concessions would go down. The client eventually conceded that they probably shouldn’t stop the AirTrain
from stopping at the airport. 😊

They didn’t become the purchaser.
 
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Not quite on topic, but another time we were on conference call to some hotshot aviation industry consultant in Hong Kong. He obviously wasn’t paying very much attention to the call or us, but during the call he seemed to realise that we were discussing the full sale of Sydney Airport. His reaction was "who would be crazy enough to sell Sydney Airport? If it’s really for sale, pay anything. Just pay anything."
 
My 2 bob’s worth : first time back in Sydney after moving to Tas early 2000s, we hired a Avis car with airport pickup. The estimate from Avis was about $300 , but they do describe this on the online booking as an Estimate..

Trip over, we return the car to the airport and get the bill - over $400, with all the extra being ‘airport site recovery’. Syd Airports skimmed a lazy 18.5% from every rental, well, only those with an airport pickup. Last time I checked that skim was 19.5% and it won’t be going backwards..

how else do airports make money ? Again Sydney and anecdotally, where they apparently pitch a day’s parking a little bit over the price of a taxi from the lower NorShore.. so what’s easier? Booking/waiting/taxi queue, or driving yr own car..
 
My pet hate about airports is the Premium Location Surcharge they skim from rental car bookings. It ought to be a fixed amount, say $50, not a percentage. If you rent a car for a day or a week or a month, the car is still only in their premium location for the same period of time. For long-term car hire (say 14 days) I've sometimes rented from an offsite location and taken the taxi there. Saved big $. You can nearly always return the car to the airport with no extra cost. I mostly use Avis, but this happens with them all.
 
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RooFlyer said:
Not quite on topic, but another time we were on conference call to some hotshot aviation industry consultant in Hong Kong. He obviously wasn’t paying very much attention to the call or us, but during the call he seemed to realise that we were discussing the full sale of Sydney Airport. His reaction was "who would be crazy enough to sell Sydney Airport? If it’s really for sale, pay anything. Just pay anything."
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Perhaps a possible buyer for Auckland when the council gets around to selling down its ownership stake?

AKL owns a lot of adjacent land so makes a lot of money from its property holdings.
 
skrendam said:
My pet hate about airports is the Premium Location Surcharge they skim from rental car bookings. It ought to be a fixed amount, say $50, not a percentage. If you rent a car for a day or a week or a month, the car is still only in their premium location for the same period of time. For long-term car hire (say 14 days) I've sometimes rented from an offsite location and taken the taxi there. Saved big $. You can nearly always return the car to the airport with no extra cost. I mostly use Avis, but this happens with them all.
Click to expand...
Having worked for one of the top 3 rental companies, not only the PLS was skimmed but seperate monthly costs for ‘Back up facilities’ (wash bay and office space), In terminal desk rental, car park office rental and a cost per space in the car rental car park!
 
Simulate said:
An interesting article but it may be worth mentioning that the US operating model is not about profit, they are all non for profit, the US model is about the community it services.
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Very interesting that the hyper-consumerist USA has this model. I've yet to step foot in an American airport but will go through several later this year. Looking forward to contrasting with Aus, EU, UAE+Dubai and Asian airports.
 
LostRedditor said:
I've yet to step foot in an American airport
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The US airports (commercial aviation) are nearly all public assets

Simulate said:
the US model is about the community it services.
Click to expand...
Don't worry, the US has about 3x the number of private airports than public ones. Community can also mean exclusive member only👍
 
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