Lecture 6-Airport Financial

8/7/2019 Lecture 6-Airport Financial

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Lecture 6:

Airport Financial

Management

By: Zuliana Ismail



Learning Outcome

Student able to:

Explain how do airport generates revenues

Compare the aeronautical and non-aeronauticalrevenues

Explain how airport services and facilities arepriced



Airpo rt F inancial

Airport financial management is important tomanage the balance of operating revenues &expenses.

In general, revenues from the operation of airport are used to cover airport's operating expenses.

What means by airport expenses???

What means byairport revenue???



What is Airpo rt Expe nses

Expenses means the cost or money that must bespent for something.

Expenses for airports include

� Capital improvements

� Operating expenses



Airpo rt Exp enses

1. Capital improvement expenses

Capital improvement expenses include costs of majorconstruction projects such as airside & terminal

expansion.

2. Operating expenses

� Some sources of operating expenses are:

� Labor (salaries),

� Supplies,

� Utilities (water / power supply),

� And maintenance costs



Airpo rt Exp enses



What is Airpo rt Revenue?

Airport revenue is income that an airport receives fromits business activities.



Revenue

In business, revenue is income that a company receives fromits normal business activities.

Usually from the sale of goods and services to customers.

Some companies also receive revenue from interest,dividends or royalties paid to them by other companies.

Revenue may refer to business income in general, or it mayrefer to the amount, in a monetary unit, received during a

period of time, as in "Last year, Company X had revenue of $32million.

Airports revenue supports airports expenses &provides for the operations, maintenance, and capital

improvements.



How do Airpo rt g enerate

Revenues?



How do Airpo rt g enerate Revenues?

Airports generate revenue from its businessactivities that can be classified into two categories,which are:

1.

Aeronautical

Revenue

2.

Non-AeronauticalRevenue

Aeronautical = Related to aircraft operation

Non-Aeronautical = Non related aircraft operation



aero nautical vs no n-

aero nautical revenues

AERONAUTICAL

REVENUES

Landing Fees

Air Navigation Fee

Aircraft Parking & HangarCharges

Airport Noise Charge

Passenger ServiceCharge(PSC)

Security Charge (SC)

Ground Handling Charges

Night flight fees

NON-AERONAUTICAL

REVENUES

Concession fees for Commercial

Activities

Car Parking & Car Rentals

Rental of Airport Land, Space inBuildings & Assorted

Equipment Fees charged for Airport Tours,

Admissions etc.



Aero nauticalRevenues

Aeronautical revenue is generated from aircraft related activities in the airside area or airport land.

Aeronautical revenue is mainly derived from landing

fees and aircraft parking fees, lighting and aerobridgecharges (paid by airlines). Landing fee is a charge paid by an airline for using

the runway. Parking fee is for using the tarmac and taxiway.



Examp le



No n-aero nautical

revenue

Non-aeronautical revenue is generated from non-aircraft related commercial activities in the terminals and on airport land.

The commercial activities including: Concession fees (e.g., rentals and profit-sharing arrangements with

concessionaires such as restaurants and retail shops)

Revenue derived from rental of land, premises and equipment (e.g.,

hotels, and airline cargo space and office space rent ),

Management of parking facilities

**Concession is the payment that the owner of commercial activities in theairport have to pay to the airport authority. Airport concessionaires (suchas restaurants, banking) typically pay rent for the space they occupy.



aero nautical vs

no n-aero nautical revenues

In most busy airports, Non-Aeronautical

revenues are about 50% of total revenues.



The taxes/fees on my ticket helpsto support airports .

How?



Ticket Taxes

The portion of a ticket that is composed of taxes and feesdepends upon the airfare and the passenger's journeydistance

Normally, airports charge a Passenger Facility Charges (PFCs)& Security Charge (SC).

PFC is a service charge for using the airport facilities & SC is a

service charge for using security facility.



PFC& SC

PFC also referred as Passenger Service Charge (PSC)

For example, airport in Malaysia, passengers are required topay a Passenger Service Charge (PSC) as well as a Security

Charge (SC). For Example:



Airpo rtRevenues

Airport Operator

Passengers

Airlines

ServiceProviders

Fares

Fees

AeronauticalCharges

Retail,carparking,hotelsetc.

PropertyRents,unregulatedcharges etc.

PropertyRents,unregulated

charges etc.



Questio n

How are Airport Facilities & Services

priced ?



22

Aero nautical charges

Landing Fees - based on MTOW of aircraft

Aircraft parking charges based on Aircraft size

Passengers charges/Terminal Fees - Based on Maximum

Seating Capacity of aircraft

Aerobridges per embarkation or disembarkation.

Hangar charges rental monthly

Navigation charges per mile per aircraft within control zone.




Landing Fees

Fee imposed based on each landing of an aircraft

Usually the largest source of income at an airport Same rate for both International vs Domestic arrival

Based on Maximum Takeoff Weight of Aircraft (MTOW)

DOW=Dry Operating Weight (aircraft basic weight)

Payload=Passenger + Cargo

FUELPAYLOADDOWMTOW !




Aircraft Parking Fees

Charge per day (24 hours)

Based on the Aircraft size wing span x fuselagedimension.




List of Fees and Charges applicable in ChangiAirport




Passengers charges / Terminal Fees

Imposed on scheduled and charter passengercarrying aircraft that use the Terminal Building

Normally one of the largest sources of revenue for anairport

Separate rate for International versus Domestic

Arrival Based on Maximum Seating Capacity of the Aircraft



27

No n-Aero nautical

charges

Hotel building rental

Offices to airlines and businesses monthly rental sq ft

Rental of check in counters - per counter per flight

Car parking per car per hour

Retail shop outlets - rentals monthly based sq feet size of the

retail outlet (the biggest non-aeronautical revenue)



Quick Test

1. The airport revenues are derived from ____________ and__________________`.

2. Aeronautical revenues are come from______________ while non-aeronautical revenues come from___________

3. Aircraft parking are charged per hour and calculated based

on aircraft sizes which are _________ X ________.

4. The format to calculate the landing charge of an aircraft isbased on the aircrafts weight orMTOW. MTOW is stand for

____________________________-.

Lecture 6-Airport Financial

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