Acsa’s property development to boost non-airline revenue
The Airports Company SA (Acsa) property precinct at OR Tambo International Airport is part of the company’s efforts to broaden its revenue stream.
The airport’s 8.5ha Western Precinct development will house offices, retailers, a hotel and conference facilities and transit-related services. It will also provide a significant boost to Acsa’s nonairline-related revenue, which includes property, retail, parking, advertising and car rental.
This revenue stream, called the nonaeronautical revenue, is becoming a major driver for airport management companies around the world, said aviation industry expert Linden Birns.
The companies are making this shift because heavy regulation makes it difficult for them to increase aviation-related revenue. “It’s a hedge in their business model,” said Birns.
Acsa’s nonaeronautical revenue accounted for 49% (R3.3bn) of total revenue in its 2018 financial year, compared to 37% in 2017. In contrast, lower airport charges mandated by its regulator, the regulating committee that is housed in the department of transport, led to aeronautical revenue falling 34% to R3.6bn.
Nonaeronautical revenue was projected to grow from the R2.77bn it made in 2016 to R3.65bn in 2020.
The Western Precinct is one of several property developments planned by Acsa to accelerate this growth. “The company embarked on a programme to develop 1,000ha of serviceable land at its nine airports, in alignment with the property transformation sector strategy,” it said in its 2018 annual report.
It is looking to generate R3bn from the development of its properties over the next three to four decades, Acsa said.
OR Tambo MD Bongiwe Pityi-Vokwana said the development of the Western Precinct would be far-reaching. The first phase would entail the construction of three six-storey office buildings above a podium with a floor area of 33,000m². Construction would begin in February and is expected to be completed by the end of 2020.
There would ultimately be seven phases, stretching from the site of the old Shade 2 carports in the north to the Southern Sun Hotel. The first-phase building will house Acsa offices and the SA Civil Aviation Authority, currently based in Midrand, and common-use facilities such as a fitness centre, canteen and creche.
Connectivity between the Gautrain station, existing hotels and the international terminal building will be improved.
The project consortium is property developer HERI Propco, MMQSMace Consultancy and Tiber Construction.