USAToday reported on Houston Intercontinental Airport’s effort to increase non-aviation revenue by cutting and bailing grass on airport land and selling it as hay to cattle ranchers. Sales generated $30,000 and the airport will be sowing 2,000 acres of a more popular grass later this year.
Airports across the US are investing this way. With the pressure to keep fees low to attract new carriers, and to offer various incentives on top of that, ie revenue guarantees from the local governments, the money has to come from somewhere. According to the North American branch of Airports Council International, U.S. commercial airports last year made about $13 billion in operating revenue, more than half from landing fees and service to airlines. Parking fees and rent accounted for another large portion.
In 2001, Dallas-Fort Worth Airport, whose land holdings are larger than the entire island of Manhattan, opened a 400-acre commercial park, with tenants that include Amazon.com. There are two Hyatt hotels on the property, one of which they own. They are planning an additional 600-acre mixed-used development.
Both Dallas and Denver sit on rich sources of oil and natural gas. Denver, in fact, just made a deal to drill 20 wells on its land, expected to generate $1.5 million in the first year. Denver has the largest amount of land of any U.S. airport and is also leasing land for mixed-use development, including a golf course and residential complexes.
Airlines are generally supportive of such measures, not only for the reduced landing fees, but because when airlines suffer bankruptcy, it does tend to hurt the airports they operate to and from. Diversified revenue would allow airports to weather these storms. The only question raised by this is this: With airports being government entities to some degree…investing could bring the risk back to the government. If they start to lose money on investments, it could translate in reverse, to higher landing fees, and ultimately…bankruptcy requiring a government bailout. Fortunately, airports appear to be aware of this.
For more examples, we recommend you consult the article we referenced above.