Airport Experience® News - Conference Issue 2025

Bisset urges consultancies designing RFPs for airports to account for the new economic challenges concessionaires are facing. “This is the way to ensure airports receive robust proposals that benefit both passengers and the surrounding communities,” he says. “While our industry’s future is bright, we are currently navigating a transition where the old economic model is not aligned with the new economic realities.” Gluck agrees that a new model is needed and he notes the changes certain airports are making in an effort to get there. “In terms of alleviating buildout costs, keep an eye on Raleigh-Durham International Airport (RDU): They have something interesting going on that may be a new paradigm that’s not really new,” he says. “They’re entering into joint venture agreements with operators from the region selected through competitive solicitations. The airport builds the concession spaces and then turns them over to the operators, doing a gross profit split. This is done in other parts of the world currently, often on duty free agreements. I’m keen to see how this works out.” Gluck adds that ICF is currently working on a project for San Francisco International Airport (SFO) with the goal of helping the airport develop a new concessions business model. The project involves collecting all the factors that go into the cost of doing business at SFO, including concession agreements, design standards, RFP clauses and by-store financial statements. “We guaranteed the operators we collected data from complete confidentiality as a condition of their providing us with information they usually don’t share with anyone, and most vendors participated,” he says. “I think that just stresses how important finding this new paradigm is to all involved parties.”

Above: Alan Gluck, principal consultant for the global airports’ commercial service line at ICF, is working on a project for San Francisco International Airport to collect and analyze sales information and other data to help the airport develop a new model for concession agreements.

must together choose to change,” he adds. “Otherwise, the passenger experience we have become accustomed to could very well disappear.” Bisset notes that as traditional operational and commercial performance strategies have become insufficient in the current economic climate, Paradies Lagardère has had to make some adjustments in its business approach. “In markets that are no longer financially viable, we will refrain from pursuing or bidding on future concession opportunities until financial viability is restored; and in moderately impacted markets, we are collaborating with our airport partners to establish contractually sustainable solutions, while tactically working together to further optimize capex and leveraging new technologies where possible to improve efficiencies,” Bisset says. Paradies Lagardère isn’t alone in being more selective in its responses to RFPs. Weddig notes that many concessionaires are doing the same. “They have higher investment yield thresholds, more risk aversion or less capital to invest; as a consequence, they’re passing on RFPs that ‘don’t pencil,’” he says. “And the more RFPs that don’t get responses – or get non-conforming or undesirable responses – the closer to meaningful change we get.”

ICF’s data scientists are building a database to analyze the information collected. “The aim is to develop the new paradigm for concession agreements, or at least to take a giant step forward by being a neutral third party, which can hopefully provide recommendations that make sense to underlie future concession agreements,” Gluck explains. “We’ll make recommendations to SFO and then it will be up to them to do what they believe is best.” Gluck notes that he doubts he’ll ever present ICF’s findings and he doesn’t know if SFO plans to share the results. “However, I expect if the recommendations that we make are accepted by the vendors, other airports will start to hear of the results of this study, and then it is up to them if they wish to act on our findings or to repeat the study at their airports,” he says. “It is fascinating to see both sides – the airport and the vendors – truly coming together and making themselves vulnerable because of just how important finding a new paradigm is to our industry.”

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AX NEWS MARCH 2025