Opinion: Flying high on retail sales

This could be a record year for the Ottawa International Airport in some ways. In part, that’s due to the expansion of retail operations other than air travel.

Retail business at the airport is on the upswing – and we’re not just talking in terms of the number of air travellers, which set an all-time record in March.

A new shopping mall on airport property, anchored by a large T & T Supermarket specializing in Chinese foods, is the most visible sign of retail expansion at the airport, whose lands also feature two hotels. The Hunt Club Marketplace shopping complex is on Hunt Club Road, just east of the Rideau River.

Air travellers can probably thank this retail expansion, and the airport’s other retail businesses, for the fact that the airport’s departure tax on passengers remains at a modest $15.

The airport, on land rented from the federal government, is a publicly owned facility that must pay its own way. It has four main sources of revenue: Fees paid by airlines, fees paid by air travellers, car parking fees and rent paid by retailers.

Many of the retailers are located in the terminal building – businesses such as Tim Hortons, which has several airport locations, and an elegant new D’Arcy McGee’s pub. The latter was among the latest to open, in the newest part of the departure lounge where the old airport terminal once stood.

The airport generated more than $14 million in revenue last year from these retail operations, representatives say. About two-thirds of this was from concessions, such as Tim Hortons and D’Arcy McGee’s. The other one-third came from land and space rentals, including the Hilton Garden Inn, Days Inn and Hunt Club Marketplace.

When car parking revenue of $10.5 million is added to this, the airport earned almost $25 million last year from these sources. That’s almost as much as the $27 million passengers paid through the $15 airport improvement fee.

Airport revenues last year totalled almost $84 million, of which the biggest chunk – more than $29 million – was paid by airlines in landing, loading and terminal fees. This means that retailing and parking combined were almost as lucrative as air travel itself.

The Ottawa airport came through last year’s economic slump fairly well. About 4.2 million travellers passed through the airport in 2009, down 2.5 per cent from the previous year. 

This year, however, has been even better. The number of travellers passing through the airport exceeded 400,000 for the first time ever in March, capping a three-month period in which the number of passengers was six per cent higher than in the same period last year. “It was a milestone for us,” said Krista Kealey, airport vice-president of communications, of the monthly record.

The March total of 409,017 passengers eclipsed the record of 397,401 set in March 2008.

Michael Crockatt, the airport’s vice-president of business development and marketing, is wooing the airlines to add international flights. He said he doesn’t really have a preference where they fly to. What counts most, he says, is being able to offer better connections from Ottawa. He gave the most recent example of expanded service to the United States, a U.S. Airways flight to Charlotte, N.C., from where passengers can connect to other destinations in the southeastern states and the Caribbean.

The latest bit of good news for European-bound travellers is that Air Canada is putting a larger aircraft on its daily Ottawa-London flight. This will add about 50 seats in each direction daily.

Back on the ground, Mr. Crockatt said space is still available at the airport for lease, but the airport is not aggressively seeking tenants with businesses unrelated to air travel.

There has been widespread speculation that a new venue for consumer and trade shows could be built on or near airport property in the near future. This would be an alternative venue for shows now held at city-owned Lansdowne Park, which is likely to be redeveloped under a proposed deal between the city and private developers.

Shenkman Corp., headed by one of the partners looking to redevelop Lansdowne, has shown interest in building a new trade show venue to replace the space that would be lost as Lansdowne Park, with financial support from the city.

Shenkman Corp.’s Kevin McCrann said last week that “it would be inappropriate for me to comment until after the city chooses a preferred proponent.” Asked whether the firm had a site in mind at the airport, he replied: “Yes,” without elaborating.

The airport’s Ms. Kealey said she could not discuss the matter until the city picks a developer for the trade show building. However, she declared: “I would say that we look forward to working on the project.”