BACKGROUND

Strategies and models for in-terminal airport concessions continue to evolve. Airports have to demonstrate resiliency and use innovative thinking to provide flexibility to concessionaires in a new environment. Escalating capital, labor, and operating costs have strained the existing business model of in-terminal concessions, while e-commerce, digitalization, and changing demand patterns have challenged traditional ways of understanding airport in-terminal concessions.

Airports are looking for opportunities and approaches to become more agile and ensure their concessions programs provide a best-in-class experience for passengers while optimizing revenue to help meet rising airport operating costs and ongoing debt and enhance airport financial self-sufficiency.

Building a concessions program requires airports to have the data and tools necessary to determine the best concessions models and strategies. The goals of a concessions program include optimizing concessions space, ensuring a balanced concessions mix, reducing barriers of entry, and identifying appropriate contracting and management practices.

Research is needed to develop a guide to help airport operators develop and manage their in-terminal concession programs.

OBJECTIVE

The objective of this research is to create a guide to help airport operators develop and manage their in-terminal concession programs.  The guide should provide at a minimum:

• Overview of airport concession industry and recent and emerging trends (e.g., technology, customer behavior).
• Map of airport concessions-related external stakeholders (e.g., existing and prospective business partners, airlines, customers, labor unions, community) and internal stakeholders (e.g., airport departments).
• Strategies, resources, metrics, and tools (e.g., decision trees, flow charts, checklists) for:
  • Effective stakeholder engagement;
  • Developing a concessions master plan;
  • Receiving and distribution of concessions products, including funding;
  • Selecting concessions business models, including capital investment strategies;
  • Identifying risks/uncertainties that impact concessionaire's profitability (e.g., change in traffic, economic conditions) and setting realistic terms and financial conditions;
  • Reducing barriers to entry for small and local businesses;
  • Optimizing the concessions procurement process;
  • Evaluating and selecting concessions proposals;
  • Contracting (e.g., key business terms and conditions, lease negotiations);
  • Ensuring concessionaires meet or exceed airport environmental, social, and economic sustainability goals;
  • Measuring performance of concessions program and individual concessionaires (e.g., financial, operational, customer satisfaction);
  • Addressing underperforming concessions programs and concessionaires and determining corrective actions;
  • Partnering with concessionaires to promote employee recruitment and retention; and
  • Marketing the concessions program and optimizing revenue (e.g., marketing fee fund).
• Executive summary.
• Slide deck (e.g., PowerPoint) highlighting key elements of the guide that can be adapted for a variety of purposes and audiences (e.g., leadership briefings).
• Representative case study examples. 

The guide and tools should be adaptable to airports of varying sizes, governance models, and resource availability.

RESEARCH PLAN

The research plan shall include the following interim deliverables for ACRP review and approval at a minimum:

• Overview of airport concession industry and recent and emerging trends;
• List of proposed representative case studies with rationale and proposed case study template; and
• Interim report to include research results and analysis to date, preliminary case study results, map of airport concessions-related stakeholders, annotated outline of guide, next steps, and identification of follow-on research ideas to be developed into ACRP problem statements.

The research plan shall include the following checkpoints with the ACRP panel at a minimum:

• Kick-off teleconference meeting to be held within 1 month of the Notice to Proceed;
• Web meeting to review and approve overview of airport concession industry and recent and emerging trends;
• Web meeting to confirm representative case studies and case study template; and
• In-person interim deliverable review meeting.

The final deliverables shall include: 

• Guide;
• Contractor’s Final Report documenting all research steps, results, and analysis;
• Summary of Key Findings;
• Further Recommended Research Memo; and
• Technical memo titled, “Implementation of Research Findings and Products”.

STATUS: Research is underway.