GAP Berlin Max J. Zenglein Performance Measurement of Non-Aviation Revenue in the Airport Business

03/10/072 Agenda 1.The Issue and the Aim of the Paper 2. Variations in the Definition of NA Revenue 3. Problems of Data Availability 4. Performance Indicators 5. Key Suggestions 6. „Our“ Definition of NA Revenue 7. Conclusion

03/10/ The Issue and the Aim of the Paper The Issue: Despite the importance of non-aviation activities for the airport business, there is no common definition in place Problems of data availability contribute to the difficulty of benchmarking non-aviation performance The Aim: Provide an overview of current definitions Discuss performance indicators highlighting problematic issues In the near future: use feedback to produce a new approach and implement the key findings to selected German airports

03/10/ Variations in the Definition No formal definition of non-aviation is in place: Much leeway in financial reporting Relatively unreliable data Exact composition of non-aviation figures often not clear Research delivers different results for the same airports

03/10/ Variations in the Definition Overview of Various Non-Aviation Revenue Shares to Total Revenue, 2003[1][1] Source: Annual reports 2003, ATRS 2005 and TRL 2005 [1][1] The 2005 reports of TRL and ATRS base their analyses on 2003 financial data, therefore the relevant annual reports are considered. Overview of Various Non-Aviation Revenue Shares to Total Revenue, 2003[1][1] Source: Annual reports 2003, ATRS 2005 and TRL 2005 [1][1] The 2005 reports of TRL and ATRS base their analyses on 2003 financial data, therefore the relevant annual reports are considered. Overview of Various Non-Aviation Revenue Shares to Total Revenue, 2003[1][1] Source: Annual reports 2003, ATRS 2005 and TRL 2005 [1][1] The 2005 reports of TRL and ATRS base their analyses on 2003 financial data, therefore the relevant annual reports are considered. Overview of Various Non-Aviation Revenue Shares to Total Revenue, 2003[1][1] Source: Annual reports 2003, ATRS 2005 and TRL 2005 [1][1] The 2005 reports of TRL and ATRS base their analyses on 2003 financial data, therefore the relevant annual reports are considered. Overview of Various Non-Aviation Revenue Shares to Total Revenue, 2003[1][1] Source: Annual reports 2003, ATRS 2005 and TRL 2005 [1][1] The 2005 reports of TRL and ATRS base their analyses on 2003 financial data, therefore the relevant annual reports are considered.

03/10/ Variations of the definition Fraport:Retail + Real Estate + Parking + Others Berlin Airports:Rents Dortmund Airport:Rents + Advertisement + Parking + Other BoozAllenHamilton:Retail + Conference Rooms + Parking BCG:Retail+Advertising Space ICAO:Restaurants + Retail + Parking + Aviation Fuel and Oil Concessions + Any other Concession or Commercial Activity, operated by the Airport

03/10/ Problems of Data Availability Some airports provide disaggregated non-aviation data, others provide only aggregated figures More detailed breakdowns often lack n appropriate definition of individual data description Variations in ownership structures result in different availability of detailed information Consolidated financial reports of airport groups make it difficult to compare it with other individual airports Reported data is not always consistent with previous years

03/10/ Performance Indicators 1. Revenue as % of PAX or sqm Not all revenue originates from the passenger Revenue could originate from employees, visitors and local residents Not all revenue has to do with the size, but also with the airport design 2. Elasticity approach Would allow to measure the importance of certain variables, e.g. the amount of international passengers Could be measured for different variables and revenue compositions, providing a better understanding of drivers

03/10/ Performance Indicators 3. Multidimensional Performance Measurement Wide variety of parameter can influence the scope and importance of possible non-aviation activity Factors could be passenger and airline structure, infrastructure and airport design, as well as regional factors These factors can either contribute to or limit the non- aviation activity at an airport We regard airports as unique operations and secondary factors could contribute to gaining a better understanding on how airports are performing

03/10/ „Our“ Definition of NA Revenue Any revenue not directly or indirectly associated with the handling of aircraft as well as getting anything (passengers, fuel, cargo) to and from the aircraft including any indirectly received revenue originating from providing necessary infrastructure and services for any kind of flight operation Most notably all commercial activity within the perimeters of the airport as well as services to other external companies, as long as they are not part of the operational activity at the relevant airport (e.g. FBOs)

03/10/ Conclusion There are variations in opinions regarding the exact definition of non-aviation Although we provide our definition, we acknowledge that no definition can be regarded as one and only Applying a single definition my not seem acceptable, but it must be obvious how the number which was used to calculate the non-aviation share to revenue was derived Any conclusions using adjusted annual report figures without a close collaboration with airports must be viewed with great caution

03/10/ Conclusion Airports need to provide access to data which goes beyond the published figures Once the above issues are followed and resolved, performance measurement could be improved with regards to precision and comparability Secondary parameters, reflecting an airport's uniqueness, must be taken into consideration

03/10/0713 Thank you for your attention!