Commercial revenues at Europe’s airports increasingly embattled

The 12th meeting of the ACI EUROPE Commercial Forum identified three pressing challenges: the one cabin bag rule, the WHO’s proposed ban on duty free tobacco sales, and the ongoing LAGs issue.

The 12th meeting of the ACI EUROPE Commercial Forum identified three pressing challenges: the one cabin bag rule, the WHO’s proposed ban on duty free tobacco sales, and the ongoing LAGs issue.

In the contemporary landscape of the airport industry, commercial revenues have become a vital part of the business – providing passengers with a better experience and more services while also helping airports maintain competitiveness and in some cases, even help finance expansion. As a proportion of airports’ overall income – commercial revenues accounted for 47% of the operating revenues of Europe’s airports in 2008. The ACI EUROPE Commercial Forum brings together members of the ACI World Business Partner programme from the full spectrum of commercial services along with airport executives in charge of developing non-aeronautical revenues. The work of the Commercial Forum is particularly pertinent in the current economic downturn, which has put significant pressure on commercial revenue streams.

The industry faces crucial challenges and the Forum identified three that are most pressing: the one cabin bag rule, the World Health Organization’s (WHO) proposed ban on duty free tobacco sales, and the ongoing
LAGs issue.

WHO’s proposed ban on duty free tobacco sales

Members of the Commerical Forum expressed extreme concern about the provisions of the draft protocol by the World Health Organisation, suggesting that duty-free tobacco sales contribute to the smuggling of tobacco products. Consequently, the draft protocol hints at a possible complete ban on duty-free and travel value tobacco sales in the future – which would be unacceptable.

This issue is particularly urgent; if the ban is adopted, the estimate is that it would be effective within three to five years and the financial loss would be devastating. A few members of the Forum pointed out the knock-on effect a ban would have on the image perception of the airports. Both ACI WORLD and ACI EUROPE are currently taking coordinated action briefing the ACI Regular Members on the urgency of the situation and encouraging them to begin discussions with their national authorities and liaising with the WHO and European Commission.

A technological solution to the ongoing LAGs issue is not yet ready and the European Commission’s current deadline of April 2010 is extremely challenging given that the technology will need to be certified and deployed.

A technological solution to the ongoing LAGs issue is not yet ready and the European Commission’s current deadline of April 2010 is extremely challenging given that the technology will need to be certified and deployed.

One-bag rule

In late January, Ryanair announced that it would strictly limit carry-on baggage on all its flights to one cabin bag and that any other carry-on items (including ladies handbags and all duty-free purchases) must all fit in one cabin bag. Failure to comply means a penalty fee of around EUR30.

Ryanair’s implementation of their new rule has resulted in uncomfortable scenes at many airports and the resulting fallout has also tarnished the image of the airport, handler and retailers. Airport representatives at the Commercial Forum highlighted that easyJet and bmibaby are also now starting to enact this rule at some airports.

ACI EUROPE has made several statements on the issue, highlighting Ryanair’s lack of logic in seeking to eliminate the same commercial revenues that keep airport charges so low. Ryanair reacted strongly, but received little media coverage for it.

It is important to recognise that the one-bag rule is not an issue of regulation – airlines are free to set their own cabin baggage allowances and Ryanair’s restriction and renewed focus on ancillary revenues means that their in-flight sky-shop stands to gain, where airport commercial revenues suffer.

An ACI EUROPE taskforce was formed to design recommended practice and estimate the potential impact of the rule, in order for members to be ready to act if necessary.

LAGs situation

ACI EUROPE reported on the latest developments for the removal of the ban on Liquids, Aerosols and Gels (LAGs). A technological solution is not yet ready and the European Commission’s current deadline of April 2010 is extremely challenging given that the technology will need to be certified and deployed.

The Commercial Forum underlined that operational assessment of the selected equipment is essential; it needs to be user-friendly and affordable for European airports. It is estimated that depending on specifications, the total cost could reach €1 billion, placing a significant financial burden on all airports. Some airports will be required to reconfigure their security areas. It must also be ensured that the technology adopted can be rolled-out extensively and quickly and will not be obsolete after a few years.

With the ever-evolving role of commercial revenues at Europe’s airports, the ACI EUROPE Commercial Forum can look forward to playing an ever increasing role in the policy formulation process of
ACI EUROPE.

Should your airport not be a member yet of the ACI EUROPE Commercial Forum and wish to join this active group, please e-mail danielle.michel@aci-europe.org


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