The secret to growing an airport’s revenue

Airports have had a turbulent time since 2019. Many of the UK’s smaller airports have seen passenger numbers decline post-pandemic – challenging finances – and larger airports are being pushed to increase their return on capital to support expansion plans and shareholder returns. 

With passenger-facing revenues constantly being looked at, several UK airports want and need to diversify their income streams elsewhere. Real estate is one major avenue that many airports could look to explore as an additional form of much needed revenue.

The land surrounding an airport is flat and accessible, with good transport connectivity. It also often has high power and good internet connections. These point to several alternative uses for the land. 

Understanding the options available for the land is critical – not just pressing on with development. Data is king for decision making and maximising the value of the land. 

Often the real estate in the airport’s wider vicinity is already zoned for industrial and commercial use. East Midlands Airport has capitalised on these benefits, creating the East Midlands Airport and Gateway Industrial Cluster (EMAGIC), comprising a combined area of 160 hectares, and home to major operators.

Data centres are another real estate asset type that would benefit from the landscape and isolated location of airports. They require ample space for large infrastructure and are best placed away from densely populated areas due to their noise levels. Unlike logistics hubs, data centres do not require access to a large pool of skilled labour. These centres also require access to power grids and advanced connectivity, typically already in place at airports.

Airports are also looking to house Maintenance, Repair and Overhaul (MRO) facilities. These repair, service and aircraft inspection services are crucial to ensure that planes remain safe and can fly as required. The need to work on entire planes or large component parts mean a location on an airport site with runway access is ideal.

As an example, Cardiff Airport is home to a British Airways Maintenance Centre. British Airways main hub is Heathrow, but the land around Cardiff is cheaper than London, and there is ample space for the necessary infrastructure such as hangars. Other smaller airports in the UK could also generate alternative income streams in this way, provided there is access to a skilled workforce. This is particularly attractive at a time when older airplane fleets means that MRO demand is higher than ever. 

We have international experience advising airports in both the UK and globally. In the last year, we’ve supported airports of various sizes with their real estate strategy, secured investment partners and offered bespoke advice on how to curate a unique aerospace ecosystem.

There’s no one-size fits all approach, but what is clear is that real estate and land represent a revenue growth area for many airports going forward.