New Revenue Streams Take Flight in Aviation

Nashville International Airport, Nashville, Tennessee

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TRUE OR FALSE: Anchorage, Alaska, was the busiest airport in the world in 2020.

Believe it or not, this is true—and it points to the adaptation of the Aviation industry to not only stay afloat, but also to thrive during the uncertain conditions COVID brought with it. Like airlines, construction companies had to find new revenue streams to capitalize on the rapidly changing conditions as COVID began to grip the world. As traveling decreased and online ordering increased, so too did the need for cargo and associated facilities, creating the demand and urgency for facilities to keep up with Americans’ changing habits.

BEHIND THE SHIFT As shutdowns moved across the nation and people were confined to their homes, eCommerce sales skyrocketed. The pandemic pushed more US consumers online, boosting eCommerce sales 44% from 2019 to 2020 and contributing to an additional $105 billion in online revenue last year.

This jump is credited for accelerating eCommerce by two years—and that shift in the way people are shopping not only changed the Aviation industry, but it also shifted owners’ long-term plans to accommodate the acceleration.

little different today than it did before the pandemic, with all sectors of air cargo seeing growth. Integrators UPS and FedEx reported revenue increases of 19-20% in 2020, and Atlas Air, a dedicated cargo airline, saw $65 million more in 2019 profits than the previous year.

Integrators and air cargo are not the only ones seeing growth thanks to eCommerce—domestic airlines are as well. In 2019, air cargo made up 12% of airline revenue; this more than doubled in 2020 with it accounting for 30%. This growth also created a greater need for freight forwarders to expand or modernize facilities to handle sending packages back out, requiring more space or renovations to facility layout to accommodate the rapidly rising need. “We’re starting to see projects that speak directly to this demand,” said Vice President Iana Tassada. “In August of 2021, Amazon opened its $1.5 billion air hub in northern Kentucky to help accelerate its push for faster delivery and to better control its logistics network.”

Domestic airports are also getting creative to accommodate the increased cargo traffic while exploring a new revenue stream.

With cargo-handling capacity now an important factor in airport traffic, some smaller airports are focusing more on

BY DON SUMMERS, VICE PRESIDENT

non-passenger travel opportunities than in the past. “We’re seeing a shift for smaller airports in the amount of cargo planes they run in and out,” said Tassada. “This has resulted in the need for larger cargo handling equipment and facilities, both at smaller airports that are shifting to a higher volume of air cargo and at larger ones that are identifying a need for more efficient cargo operations.”

THE FUTURE OF AVIATION While many air cargo-specific facilities and airlines felt the largest immediate impact of the eCommerce shift, high-passenger airports are finding ways to capitalize on the shift as well. The eCommerce boom, along with COVID and how it changed

Hartsfield Jackson Atlanta International Airport Air Cargo Building C in Atlanta, Georgia

CARGO-DRIVEN CONSTRUCTION Like any unexpected change in market needs, the shift to more cargo capacity and infrastructure to accommodate it means the direction of Aviation looks a

IANA TASSADA, VICE PRESIDENT

JE Dunn Construction | groundbreaking |

e ommerce forced owners to adjust C their future plans and investigate alternate revenue, as it was quickly aprent when passenger travel halted that cargo and other non-passenger segments picked up.

Consumers’ habits have had a ripple efct on the industry, and air cargo is just one part of a larger shift in revenue streams

the public’s shopping—and travel—habits underscored the importance for airports to remain diversified in their revenue streams. It’s always been a best practice to have healthy diversification of aeronautical (passenger-driven) and non-aeronautical revenue streams. COVID reinforced the need for airports to be diligent in that, and having cargo operations at their airport is a great opportunity to increase non-aeronautical revenue — something that is here to stay for the foreseeable future.

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