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Airport Strategy – Invest in Assets that Reduce Costs

Most public agencies are dependent on revenues from taxes or fees, with constant pressure to deliver service for the minimum absolutely necessary.  While airports are usually self-supporting and funded with rents and fees, there is always pressure to economize.

A simple example is relocating concessions from before a security check point to after.  Because of Transportation Security Administration restrictions, concessions revenue at locations before security check points have fallen dramatically since 2002.  Most airports have now readjusted and reallocated concessions to post-security locations.

Armstrong Airport in New Orleans is seeking to reinvent itself with a much larger concept, to create a facility that reduces its costs by increasing revenues and limiting the burden on its rate payers, the commercial air carriers leasing terminal space.  By re-configuring concessions and right-sizing its new terminal, Armstrong seeks to reduce its operating costs while increasing sales, thus producing more revenue with a public asset and delivering the same or better service, i.e. more flights to more places, with the same cost.

Contributed by:

Ross Chapman
Principal
rfc@tmg-consulting.net or 504.569.9239

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The views, interpretations, or strategies expressed are those of the authors, and do not necessarily reflect the position of TMG Consulting. This site is meant for educational purposes only and does not constitute professional advice. TMG Consulting makes no representation as to accuracy, completeness, or suitability of any information on this site and will not be liable for damages arising from its display or use.

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