How Do Airports Make Money?

Have you ever wondered how some airports are architectural masterpieces, containing luxurious amenities such as rooftop pools? Believe it or not, many airports, often those with the greatest passenger traffic, are hugely profitable. Over half of airport revenue comes from passenger fees included in your ticket price, while the other roughly 40 percent is generated by non-aeronautical activities. Explore this slideshow for a full look into how airports make money!
Airports Can Be Highly Profitable: According to research from Airports Council International (ACI), after surveying 919 airports around the world, global airport industry revenues for 2017 totaled $161.3 billion. In 2013, about 70 percent of airports were operating on a loss, with that trend reversing slowly since then.
Airport Revenue by Source: The majority of airport revenue, about 56 percent, is from aeronautical means, such as terminal, landing and passenger fees paid by airlines. Almost 40 percent of revenue comes from non-aeronautical activities, and the remaining 4.6 percent is from non-operating activities.
Distribution of Non-Aeronautical Revenues: Non-aeronautical revenues have been a rising source of profitability, as airports continuously upgrade their amenities to attract passengers. Top sources of these revenues include retail concessions, car parking, property and real estate, advertising, car rentals and more.
Cost per Passenger to Operate: On average, the cost to operate an airport is $13.55 per passenger. This figure varies greatly based on size and location. For example, London Heathrow Airport, among the busiest in the world, needs to generate around $19 per passenger in order to break even.
How much do airports actually make per passenger? Global aeronautical revenue per passenger is $10.15, while airport revenue from non-aeronautical activities is $7.12, on average, to total just over $17 per passenger. Surveys have shown that an increase of 1 percent in global passenger satisfaction, on average, generates growth of 1.5 percent in non-aeronautical revenue.
Are Airports Investable? The airport industry’s net profit margin was 22.2 percent for 2017. Plus, global return on invested capital (ROIC) was 7.3 percent. Global passenger traffic demand continues to rise, signaling that airports, along with airlines, stand to benefit from the growth.
The Most Profitable Airports in the World According to total operating revenue in 2015, the most profitable airport in the United States was John F. Kennedy International in New York, followed by Newark International in New Jersey. Globally, the top-earning airport group was Aena Aeropuertos of Spain, which operates several airports in the country, including those in Madrid and Barcelona.

Newwark liberty international airport Newark, NJ
Source: Famartin, Creative Commons Attribution-Share Alike 4.0 International
John F. Kennedy International Airport, NYC.
Source: Flickr, Pheezy,Creative Commons Attribution 2.0 Generic
Bilbao Airport. Basque Country, Spain
Source: Basotxerri, Creative Commons Attribution-Share Alike 4.0 International
Sources: Airports Council International (ACI), Official Airline Guide (OAG), International Air Transport Association (IATA), Charlotte Business Journal.

All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor.

Holdings may change daily. Holdings are reported as of the most recent quarter-end. None of the securities mentioned in the article were held by one or more accounts managed by U.S. Global Investors as of (09/30/2018).

Return on invested capital (ROIC) is a calculation used to assess a company's efficiency at allocating the capital under its control to profitable investments.