When travellers think of airports, they conjure up images of luxury boutiques, restaurants, spas and gadget shops. That’s mostly if they are travelling in Europe and Asia. In the USA the stores on offer in airport terminals are improving, but still quite basic.
But it is in Africa that airports have the most ground to make up. Nigeria is making a start as the Aviation Ministry’s ambitious Aerotropolis programme gets under way. Airports will no longer be just somewhere to pass through en route to elsewhere – they will become destinations in their own right.
Soon purveyors of fine goods will be creating tempting displays of the latest fashions and other top quality merchandise. Champagne bars and spas will spring up as investors understand the realities of the new airport experience and the opportunities they present. Behold the bored consumers, with money to spend in whatever currency as they languish waiting to board their plane. With retail sales per square metre three to four times greater than in shopping malls and high street shops. This evolution in function and form has been long awaited.
With it comes significant business opportunities, and the big names are already in negotiations. Typical commercial activities include duty free shops, cultural and entertainment attractions, banks and currency exchanges and restaurants and speciality retail.
Within the airport area itself, other opportunities have opened up for hotels and accommodation. Already major hotel groups have signed memoranda of understanding (MOUs) as off takers, ready to build grand hotels within a stone’s throw of the jet bridges and arrival halls. Soon passengers will be able to relax in comfort from the moment they land. These international-standard hotels will become destinations in themselves, places to meet and entertain.
Within the wider aerotropolis boundaries, there are many and varied investment possibilities. Outside the core airport city will be well-defined parks and clusters of offices, tourist attractions, manufacturing and technology sites, bonded warehouses, logistics and industrial parks, add to this the residential areas with all the attendant requirements such as fire stations, restaurants and supermarkets, plus the Airport Edge City, and it becomes apparent that opportunities abound.
Investment opportunities for all
The ministry is keen to operate public-private partnerships in terminals and hangars alike, and in the fields of power supply and waste management. Within the logistic park, free trade zones, manufacturing , research and e-commerce clusters, along with the bonded warehouse, technical services, transport and utilities other are multiple options hat require substantial investment. The private sector also has a vast array of possibilities, from offices to parking, passenger and shuttle services, cargo and perishables handling to energy supply, logistics and leisure. Business parks , convention centres, housing, medical centres and entertainment parks are all areas that offer realistic returns for established companies and entrepreneurs alike.
For the domestic private sector, the benefit of local knowledge, the appetite for home-grown industry and consequent growth prospects are all aspects to be considered. Foreign investors should be keen to supply capital, expertise and networks to bring these projects to early fruition.
The Aerotropolis model contains all the commercial facilities that support airports and their businesses, creating strong links between the city, the airport and the surrounding areas and bringing together all the components for successful enterprise.
The daily consumer population of a modern airport is larger than that of many cities. Revenue from sources not related to aviation can be considerably greater than income from those that are, and returns for can be substantial. An airport city can anchor aviation-enabled trade in goods and services, reaching throughout the surrounding region and enabling businesses outside the traditional environment to expand and succeed.
The benefit to the airport is enormous. Aviation-related revenue traditionally derives from landing fees, gate leases and passenger service charges, but with the development of the airport city there are substantial and regular revenues to be received from site leases, advertising and parking. Additionally the airport develops a brand image of its own, enhancing the investment potential for clients.
The success of the Aerotropolis concept depends on public-private partnership. In order for the private sector to be fully committed, various incentives will be offered in the form of tax and capital allowances. These will include tax rebates, duty-free, pioneer status, reinvestment allowances, holidays and free-trade status.
Where there is viable infrastructure, the government will provide the critical and prerequisite infrastructure and facilities, which will then be developed, funded and managed by the private sector.
In the case of semi-viable infrastructure, the government will provide indemnities, set an attractive regulatory regime and offer equity funding in hard assets an attractive. The private sector will offer management expertise and project development and subsequent funding.
With decisions imminent on the sites for new cargo terminals, opportunities are available for investment in this area. In particular, the ministry is looking for partners in storage and warehousing, coldrooms and temperature-controlled containers for perishables, trucking, cargo sorting sections and staff training. These are all vital components for the successful initiation of the perishables sector, with its vast potential for income generation.