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Revenue per passenger
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Cost per passenger
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EBITDA margin
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Return on invested capital
5
Customer satisfaction
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Here’s what else to consider
Airports are complex businesses that require careful financial management to ensure profitability, sustainability, and efficiency. However, measuring the financial performance of airports can be challenging, as they involve multiple revenue streams, cost drivers, and stakeholders. In this article, we will explore some of the most effective financial performance indicators for airports, and how they can help airport managers make informed decisions.
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1 Revenue per passenger
Revenue per passenger (RPP) is a key indicator of how well an airport is generating income from its core activity: serving passengers. RPP measures the total revenue from aeronautical and non-aeronautical sources divided by the total number of passengers. A higher RPP means that the airport is able to capture more value from each passenger, either by charging higher fees, offering more services, or attracting more spending. RPP can vary depending on the type, size, and location of the airport, as well as the mix of airlines, routes, and passengers.
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2 Cost per passenger
Cost per passenger (CPP) is another important indicator of how efficiently an airport is operating. CPP measures the total operating expenses divided by the total number of passengers. A lower CPP means that the airport is able to provide its services at a lower cost, either by reducing expenses, increasing productivity, or optimizing resources. CPP can also vary depending on the factors mentioned above, as well as the level of service, quality, and safety standards.
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3 EBITDA margin
EBITDA margin is a widely used indicator of how profitable an airport is. EBITDA stands for earnings before interest, taxes, depreciation, and amortization, and it represents the operating income of the airport before accounting for financing and capital costs. EBITDA margin measures the EBITDA divided by the total revenue, and it expresses the percentage of revenue that is left as operating profit. A higher EBITDA margin means that the airport is able to generate more profit from its revenue, either by increasing RPP, decreasing CPP, or both.
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4 Return on invested capital
Return on invested capital (ROIC) is a comprehensive indicator of how well an airport is using its capital to create value. ROIC measures the EBITDA minus taxes divided by the total invested capital, which includes equity and debt. ROIC expresses the percentage of return that the airport is earning on its capital, and it reflects the efficiency and effectiveness of its investment decisions. A higher ROIC means that the airport is able to create more value from its capital, either by increasing EBITDA, decreasing taxes, or optimizing capital structure.
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ROIC by itself perhaps does not tell the full story of financial performance and economic efficiency. It needs to be compared to the weighted average cost of capital (WACC) to be more meaningful!
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5 Customer satisfaction
Customer satisfaction is a qualitative indicator of how well an airport is meeting the expectations and needs of its passengers. Customer satisfaction can be measured by various methods, such as surveys, feedback, ratings, or reviews. Customer satisfaction can affect the financial performance of an airport in several ways, such as influencing passenger loyalty, spending, word-of-mouth, and reputation. A higher customer satisfaction means that the airport is able to deliver a positive and memorable experience to its passengers, either by enhancing service quality, convenience, comfort, or safety.
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6 Here’s what else to consider
This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?
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Apart from the above mentioned factors, very important are the return on assets and the return on investments. Further on other factors to be taken into accordance or revenue of the passengers per miles then availability of the seats per miles then the critical is the load factor the operating revenue and the operating expenses. It changes from a passenger aircraft to a cargo aircraft Because in the case of a passenger aircraft, the revenue per available seat per mile is a key indicator of pricing and profitability. In the case of a cargo airline, cargo load that measures an airport revenue generated for each available, cargo load and is a key factor of pricing and profitability.
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