Where Will the Diversification of Airport Services Stop?

There is a great constant in air transport: everyone complains. Manufacturers are unable to deliver their orders due to a lack of manpower, carriers cannot earn enough money, with a few notable exceptions, airports are constrained by their pricing agreements with airlines and customers, and finally passengers themselves are not happy with the services provided by the entire chain of operators in this sector of activity. This does not prevent air transport from continuing to grow steadily since the end of the Second World War, i.e. more than 80 years.

In the middle of this activity are the airports. It is the obligatory and almost monopolistic crossing point if you want to get to a city by plane. Their position is sufficiently protected that they can afford to set their prices without fear of competition. However, the airlines are reluctant to pay the fares requested and have managed to ensure that these fares are governed by agreements between the users, which are the carriers and the owners of the infrastructure, the companies managing the airports. However, this practice puts the latter in a state of fragility. They are obliged to finance the development of their technical and commercial facilities for long periods of time, while operators can at any time change their strategy and, for example, abandon services deemed unprofitable, which takes essential revenue away from airports.

So to overcome the uncertainties and find the resources necessary for their development, management companies have resorted to two strategic developments. Firstly, for the largest ones, to broaden their field of activity by taking control of airport platforms that are sometimes very far from their historical base, and thus create a network capable of balancing revenues in the event of difficulties at one of the airports managed. And then to diversify their service offer within their facilities. Based on the principle that a clientele with high purchasing power was forced to spend long periods of time, sometimes several hours, in their terminals, the major airports have created shopping malls that are sometimes very large and attract major commercial brands and bring in a very significant income, up to half of the revenues of the major “hubs”, while providing a fun occupation for passengers.

Of course, the airlines have complained because they believe that the customers of these new shopping centres belong to them and that they are entitled to claim a share of the profit it brings. Airports, on the other hand, are fiercely opposed to giving up anything, arguing that without this resource they would have to drastically increase their fees, which is unacceptable to the airlines, and the latter claim that they are the only players in the air transport chain to lose money. This balance in the allocation of commercial revenues is unlikely to be upset.

On the other hand, large airports have to face a new risk: the development of surface lanes. The great progress made in rail transport and ecological pressure naturally lead to a reduction in the number of vehicles using airport car parks, which are so profitable, and even to a reduction in the number of passengers, and therefore of aircraft movements for services of less than 3 hours of flight. The safety constraints imposed on air passengers and not on rail transport customers are not for nothing. So imagination starts to run, and airports start thinking about new services.

Always based on the principle that customers spend a lot of time in their facilities, that they have an above-average purchasing power and that they are not afraid to travel, the managers of these large airports are embarking on the activity of travel agencies, as has recently been announced by Aéroports de Paris. This can become dangerous for the profession of tour operators unless this service is provided by an agency that buys a concession in the airport concerned. But it is difficult to see how, given the low margins made by travel agencies and the operational risks of tour operators, it will be possible to levy fees on this activity.

Once this new service is launched, it is difficult to see where it could stop: why not banks or real estate agencies, what do I know? Imagination knows no bounds… except perhaps those of common sense.