# The Airport Concession Economy Airports make more money from what happens inside terminals than from flying aircraft. Building rentals, landing fees, and fuel charges form the base layer. Concessions (retail, F&B, services) form the margin layer. The margin layer is where profitability lives. The mechanics: concessionaires pay rent as a percentage of sales, plus a Minimal Annual Guarantee (MAG). This creates a direct financial link between operational efficiency and commercial revenue. More on-time flights means more passengers in terminals. More passengers with more dwell time means more concession revenue. A 10-minute reduction in security wait times translates to 10 more minutes of browsing per passenger. Why airports are attractive for brands: guaranteed foot traffic, extended dwell times (often 2-3+ hours), a captive and disproportionately affluent audience. Frequent flyers skew high income. Luxury retailers like Louis Vuitton and Burberry value airport presence for brand exposure as much as direct sales. The concession model creates an interesting optimization problem. Gate assignment decisions have commercial consequences. Routing passengers through specific terminal zones changes which retailers get the traffic. Few airports model this second-order effect today. The operations team optimizes for on-time performance. The commercial team optimizes for retail revenue. They rarely talk to each other. See [[Total Airport Management]] for why this is changing. Niche services are a growing category: luggage wrapping, airport spas, premium lounges, fast-track security. Private equity has noticed. These are high-margin, space-efficient businesses that capture willingness-to-pay from time-pressed travelers. The [[Friction Frontier]] in action: passengers pay to reduce friction. The structural insight: whoever improves operational efficiency at an airport indirectly drives concession revenue. This gives optimization vendors a second value proposition beyond cost savings and delay reduction. Hard to quantify, but real. Related: [[Airport Operations MOC]], [[Passenger Flow Optimization]], [[Friction Frontier]], [[Total Airport Management]] --- Tags: #deeptech #investing