Shopping or dining? On passenger dwell time and non-aeronautical revenues

Abstract

Data reveal that passengers spend more time at airports. Does this translate to enhanced commercial revenue, and if so which revenue types—food and beverage, retail, and other terminal services—are impacted? Leveraging a unique panel data of passenger dwell time at 89 U.S. airports, this study explores its influence on non-aeronautical revenues. We find that dwell time positively influences non-aeronautical revenues (10% increase in dwell time implies a 5% increase in revenues) with varying impacts on the revenue components. Specifically, we find that a 10% increase in dwell time is associated with an increase of 8% and 6%, respectively, in food and beverage as well as retail revenues, but with no significant impact on other terminal services revenues. Importantly, these impacts further vary with the airport terminal design, which we categorize as either linear, finger pier, or concourse. Our findings suggest that non-aeronautical revenues increase in dwell time at both linear and finger pier airports, with no such impact at concourse airports. Further, dwell time elasticities for food and beverage are roughly double at linear-design airports than at finger pier design airports. These are instrumental insights for further airport development and of merit for the discourse on airport privatization and regulation.