As the global economy expands and the balance of spending power shifts, the airport's economic role is changing. Not content with just providing infrastructure for the airlines or acting as a stagnant hub on the way from Point A to Point B anymore, airports are transforming into dynamic and vital elements of the travel value chain.
Today's airports are no longer restricted to the food courts, magazine stands and duty-free stores of old. Around the world we are seeing passenger terminals morph into luxury shopping malls and gallerias featuring brand-name boutiques and specialty retail; gourmet dining restaurants with regional cuisine, entertainment venues complete with live music, art and cultural attractions, as well as centers for knowledge exchange and booming business. Concierge-staffed business lounges and trade facilities are also sprouting up in the terminals, as well as concourse-connected convention centers and high-end hotels.
To put it simply, "city airports" are becoming mini "airport cities," vital entities open 24/7 and throbbing with non-stop activity and a steady stream of international passengers. It’s an emerging global trend that is seeing cities, business centers and entertainment venues rising up around large airports and making them destinations in their own right.
The airport city–or aerotropolis--concept is a direct response to uncertain economic times and sparse federal funding. This model allows airports to serve as a catalyst for stimulating local and global economic activity, boosting non-airline based revenues, and promoting local job creation and community.
Internationally, airport cities are already a reality. They are prevalent in Europe, the Middle East and Africa. In fact, Dubai is the world’s largest aerotropolis. Heathrow, Frankfurt, South Korea and Singapore are all excellent aerotropolis success stories as well.
While a little slower to catch on, the aerotropolis trend is now starting to take hold in the United States, turning the traditional passenger terminal model upside down and shaking things up in the aviation industry. Seattle, Denver, Dallas and Orlando are a few of airports who are beginning to adopt the aerotropolis model.
Defining an Aerotropolis
The airport city is not a brand new concept. It's been around for years and there is even an official term--aerotropolis--that was coined by University of North Carolina Professor John Kasarda.
According to the Kasarda and other industry visionaries, an aerotropolis is an alternative urban model that places airports at the core, with the "city" then rising up around them--connecting workers, suppliers, businesses and goods to the global marketplace. With an aerotropolis, passengers and locals alike can conduct business, exchange knowledge, shop, eat, sleep and be entertained without ever leaving the immediate airport area.
The concept recognizes that apart from performing its traditional services, airports can evolve a range of new non-aeronautical functions and revenue generators, from developing their real estate into commercial assets and attracting aviation-linked business to transforming their terminals into high-end shopping malls and family-oriented entertainment and leisure venues, to expanding their logistics and distribution chains.
By becoming an aerotropolis, airports position themselves as dominant drivers of business location, economic growth and global economic integration for a region. Some even consider airports as influential to urban business and development in the 21st century as freeways were to the 20th century, railroads were to the 19th century, and waterways were to the 18th century.
Forces Fuelling the Shift
So what are the forces that are causing this paradigm shift and transforming traditional airports into modern airport cities and the business hubs of the 21st century? There are several factors:
Global Economy: Primarily, it’s the economy. The global market is constantly evolving and in its wake, the role of the airport in regional and global economic development has rapidly expanded. Speed, agility and connectivity are key, making airports today's most efficient gateways for global trade and drivers of global growth.
Economic Downturn: Also, the economic downturn was a wakeup call for airports. Funding dried up and challenged airport operators to focus increasingly on non-aeronautical revenues. It has now become critical for airports to generate higher retail sales and uncover other ancillary income streams if they are going to survive and thrive in the future.
Increased Competition: Worldwide competition has increased dramatically in the last several years as more and more airports join the global economy and vie for passengers and business. To cope with these challenges and pressures and be competitive, airports are being forced to be dynamic, proactive, innovative and flexible.
Passenger Experience: Improving the overall passenger experience has become an overarching goal for airports over the last few years. This has pushed airports to raise their game in terms of customer-service delivery and retail offerings, which in return has sparked the rise of the destination-targeted services being delivered in airport cities today.
Seeing Value in the Aerotropolis Concept
As aviation continues to change the face of global trade--more than a third of the value of all goods transported worldwide are now shipped via plane-- the most innovative and competitive cities are seeing the value and embracing the concept of aerotropolis.
Urban development around a well-connected airport can help boost annual revenues and fuel regional activity and growth by:
- Providing new and expanded non-airline based revenue channels such as retail, parking, concierge services, real estate and more,
- Becoming a destination for large business meetings due to the convenience of having everything at the airport (i.e. no need for taxi’s, logistics, etc.),
- Attracting and retaining a wide range of aviation-related businesses to their peripheries,
- Creating local jobs,
- Improving connections to airport from business parks, residential areas and downtown
- Improving infrastructure and mitigating congestion,
- Increasing airport cargo and passenger activity, and
- Raising a city's profile and enhancing its reputation as an ideal place live, work, and do business.
The aerotropolis concept can help cities elevate their place in the global travel chain and create a true global gateway that can dramatically stimulate their local economies and allow them to become vital fiscal contributors to their region.
Supply Chain Ripple Effect
As U.S. airports adopt the aerotropolis model, their suppliers and vendors will need to make changes as well. They, too, will be required to find ways to help airports maximize non-airline related revenue.
One way suppliers can meet the new requirements is by offering end-to-end services that enhance the passenger experience. From parking and shuttles to baggage handling, to facilities maintenance and energy management, to passenger and aircraft services--these integrated programs help airports generate ancillary revenue.
A great example of this is Heathrow airport. They provide a seamless range of services from passenger service ambassadors, inter-terminal bus connections, and helping passengers with reduced mobility, to concierge shopping experiences. Since implementing this end-to-end approach, they have seen service scores and retail sales hit all-time highs.
Bundling is another way suppliers can support the aerotropolis model and its demand for speed, agility and connectivity. Packaging their services and customizing an offering for the airports not only improves performance and efficiency, it provides many economies of scale that dramatically drive down operational costs.
Bio: Thomas J. Marano is the president of Air Serv Corporation, an ABM Company. As President, Marano oversees the company's growth strategy and execution while building on Air Serv's values of integrity and service excellence.
ABM’s aviation business meets the end-to-end service needs of airlines and airport authorities of all sizes-- major hubs, mid-sized and regional. ABM’s 2012 acquisition of Air Serv created an aviation vertical for the company with over $650 million in annual revenues and created a full-service provider, including janitorial, passenger, security, retail and transportation services.
