The global economy is beating to the sound of a different drum. Forget location, location, location. It’s all about access, access, access.
A vibrant airport is crucial to being competitive in such a market. We need to get away from the idea that airports are simply places where people fly in and fly out and turn them into strategic employment activity centres – multi-purpose areas that deliver on a number of levels.
Airports rely on aeronautical revenue, such as landing fees and passenger charges. But if that is all they draw their revenue from, they will never be competitive.
Those that adopt other non-aeronautical uses, such as retail, introduce extra income streams and ultimately may even be able to drop charges for airlines. All airports are competing to draw airlines to their hub – those offering a better value proposition will have the edge.
The idea of an airport city, or wider aerotropolis, is taking shape around the world, with bustling centres realising the benefits of developing an airport that has many characteristics of the CBD.
At Changi Airport in Singapore, about 100 million passengers pass through per year with an estimated spend of $28 per head – or $2 billion a year in revenue. Smaller domestic airports in Australia, such as Perth, are estimated to attract around $9 a head.
Passengers are a captive audience, with many having to spend hours at an airport waiting for the next flight. The more attractive their surroundings, the more likely they are to spend up while they wait. In conjunction with the higher average income of airline passengers, this means that retail sales in major airports can be up to three times greater than shopping malls, with JFK airport in New York turning over an average of $18,000 per square metre in 2007.
Amsterdam doubles as a shopping mall with retail, an art gallery and fitness centres; Changi has cinemas and saunas; Bangkok is building a golf course; and Dubai Central is spending $42 billion on office towers, a mega-mall, golf course, as well as residential accommodation for airport workers.
There are also competitive advantages in locating different types of businesses in or near the airport precinct. The economy is more mobilised and the success or otherwise of many companies often depends on how quickly they can deliver goods. Manufacturing firms that rely on high speed delivery are off to a flying start if they are within quick access of the airport.
Global companies, too, are becoming increasingly aware of the benefits of locating regional head offices near the airport. Research shows that high-tech professionals are travelling a large proportion of their time because they know the knowledge-transfer and networking benefits of being face to face with clients and colleagues, but they waste precious hours getting to and from airports. An office located near the airport enables executives to fly in, carry out a two hour meeting and fly back out.
Authorities need to designate the airport as a very important employment sector and activity centre, and develop public transport that delivers to that area. The demand for employment land at airports in Australia is already increasing, particularly around Australia Trade Coast in Brisbane, and to a lesser extent in Perth where mining services have clustered for access to mines in the State’s north and south. However, Australia has yet to experience anywhere near the level of investment in commercial office, hotels, conference and leisure facilities and supporting residential development for airport employees that is happening globally.
We must focus on what we should do with this surrounding land to maximise competitive advantages, and airport masterplanning currently occurring in many Australian cities must begin with a strategic employment plan. Putting up a billboard advertising available land is not the answer. The area will fill up with non-strategic businesses and the markets the economy wants to capture will simply fly elsewhere.