In total, 66% of global airport industry supplier respondents have marketing budgets of less than $250,000 for 2013. How is this industry spending its media, marketing and sales budgets, and how is this set to change in the future?

ICD Research’s 2013 industry survey revealed that, on average, the marketing budgets of airport industry suppliers are expected to rise by 6% over the next 12 months. A total of 33% of respondents expect their marketing expenditure to rise by 5-25%, while only 6% of respondents expected their marketing expenditure to decline by 1-10%.

Overall, the average size of the annual global marketing budget of airport industry supplier respondents stood at $3.7 million in 2012, increasing to $4.7 million in 2013.

In 2011, the average annual marketing budget stood at $3.6 million, compared with $3.2 million in 2010. This historical comparison indicates that marketing budgets have increased from 2010 to 2013, and that companies are devising aggressive marketing plans that correspond with the respondents’ positive revenue growth expectations.

Opinions on revenue growth

Of all respondents, 66% from companies that operate in Asia-Pacific and 70% from companies operating in the rest of the world are optimistic about revenue growth in 2013, compared with 49% of respondents from companies operating in North America and 44% from companies operating in Europe. This disparity is predominantly due to the fact that Asia-Pacific is considered an emerging hub for global economics, trade and tourism activities, which has encouraged the growth of global air travel within the region.

Consequently, many airlines have expanded their routes and several new airlines have been established to offer diverse flight routes in the Asia-Pacific region, resulting in increased revenues for airports operating there. This is expected to continue in 2013, with new airport construction and renovation projects expected to cater to the region’s increasing air travel volumes. Narita International Airport in Japan, for example, plans to expand its capacity to 270,000 movements a year until March 2013 and to 300,000 by early 2014.

Factors influencing recovery

The economic slowdown had a dramatic impact on the financial health of principal companies in the global airports industry, reducing profitability and causing some companies to shut down completely. Now, with the industry gradually recovering, companies are shifting their focus from survival to revenue growth. For example, to protect themselves from the effect of rapidly increasing jet fuel prices, airlines increasingly opt to hedge significant portions of their fuel expenses at various prices per barrel below the market price, an arrangement that allows these companies to significantly reduce their operational costs.

Popular business strategies

The survey also looks at the changing strategies employed by airport industry buyers (see graph, above). Airport operators use extension plans to generate new business, as the construction of new terminals will drive development activities and passenger traffic, supporting the sales effort in the creation of new business opportunities. For example, in October 2012, Lynden Pindling International Airport in Nassau, Bahamas, opened a 226,000ft² international terminal that includes a baggage handling system, four restaurants, lounges and six hotel reception lobbies. The new terminal is part of the second phase of airport redevelopment being carried out by the Nassau Airport Development Company.

Additionally, in January 2013, Bristol International Airport in the UK awarded a construction framework contract to 13 firms to boost the capacity of the airport. The contract has been divided into civil engineering and building frameworks, with the work aimed at doubling the size of the terminal and creating aircraft parking stands, two multistorey car parks and a hotel.

As part of the project, the capacity at security and immigration will also be boosted, as will aircraft accommodation, while a new public transport interchange and underground fuel storage facility will also be built. The four-year deal is intended to support the airport’s expansion master plan, allowing it to handle ten million passengers a year over the next decade.