By Casper Veenman and Evelijn Zikken

In today’s rapidly evolving retail environment, airports face increasing challenges to sustain or improve their commercial performance. This trend is especially concerning for Europe’s largest airports, where non-aeronautical (non-aero) commercial activities are primary revenue drivers. As pressure mounts on traditional aeronautical fees, non-aero revenue streams have become crucial to airport profitability.

The return of air travel post-pandemic is notable; passenger numbers across Europe are projected to surpass 2019 levels by 2024, reaching an estimated 2,400-2,500 million passengers. However, despite these promising foot traffic figures, real total passenger spending - adjusted for inflation - has been on the decline, driven largely by reduced retail spending per passenger, which fell by 20-25% between 2015 and 2023. In contrast, the F&B sector showed resilience, with spending per passenger increasing by 25-30% in the same period.

Key Challenges to Retail Spending

Several factors contribute to declining passenger retail spending. Shifts in customer preferences, an evolving customer demographic, and the unstoppable rise of e-commerce have reshaped the retail landscape within airports. While some airports have adapted by offering tailored products and services, other changes, such as the impact of online shopping, pose more permanent challenges. To address these shifts, airports must pursue new strategies to boost passenger retail engagement and spending.

Opportunities in Non-Aero Commercial Activities

Despite these headwinds, certain airports are finding success in non-aero commercial activities by leveraging innovative approaches. Singapore Changi, Dubai International, and London Heathrow are examples of airports excelling in this domain. Singapore Changi stands out with its expansive retail space, which supports a wider array of offerings than many other airports can provide. Both Dubai International and Singapore Changi have also taken steps to focus on sustainability, integrating eco-friendly materials and products into their offerings to appeal to environmentally conscious travelers.

Moreover, some airports are increasingly catering to specific customer segments and preferences. Dubai and Changi, for example, have curated luxury retail and personalized services targeting premium travelers. Schiphol Amsterdam Airport has adopted a more localized approach, featuring Dutch specialties like locally sourced cheeses and well-known local brands. These airports are also responding to digital shifts: Istanbul Airport enables passengers to shop online with an option to pick up items upon arrival, while London Heathrow uses social media actively to promote exclusive and duty-free products, capturing the attention of connected, digital-savvy travelers.

Building Blocks for Commercial Excellence

Achieving commercial success in this shifting environment requires a strategic focus on five core “building blocks” that can drive long-term commercial performance:

• Customer Insights and Data
• Commercial Capabilities
• Airport Operations
• Business Partnerships
• Retail Space and Investments

Successful examples can be seen in London, Paris, and Amsterdam. Since Heathrow’s privatization in the 2000s, the airport has revamped its commercial space and is now one of the most profitable airports globally. Paris Charles de Gaulle and Amsterdam Schiphol are also investing hundreds of millions annually in terminal development, with Schiphol recently announcing a EUR 6 billion investment in commercial terminal space to reclaim a top-tier ranking in customer satisfaction and service quality.

A Proven Commercial Improvement Program

Drawing on years of industry experience, consulting firm Roland Berger has developed a comprehensive commercial improvement program tailored to help airports enhance non-aero revenue. This program includes a diagnostic and implementation phase and equips airports with a structured, adaptable approach to commercial improvement, helping them navigate the complexities of today’s airport retail environment. Roland Berger’s track record shows proven success in helping airports realize their commercial goals swiftly and effectively.

To learn more about how Roland Berger’s commercial improvement program can transform airport performance, download the full report and discover actionable insights tailored to the aviation retail sector.