Real estate is gaining altitude as a revenue source for Edmonton Airports.

Airports are increasingly turning to non-aviation sources in order to keep passenger costs down, and for Edmonton Airports this is a revenue stream that officials expect will play a larger role.

“Every dollar (from non-airside operations) is another dollar that eases the burden on the airlines,” said Scott Clements, Edmonton Airports president and CEO. “As a not-for-profit corporation, we would be in a better position to deal with airline rates and charges.”

Airlines currently shoulder about 30 per cent of the authority’s operating costs, if the Airport Improvement Fee (AIF) is factored out of the equation, said Clements.

Image courtesy of Edmonton Airports Authority
A rendering of the exterior of the redeveloped north terminal at Edmonton International Airport. A new hotel is also in the works.

Real estate in its broadest sense brings in about two per cent of Edmonton Airport’s revenues. But Clements expects that number can easily reach five per cent.

“We think we can add another $3 million to $4 million on our bottom line, every year, with full exploitation of our real estate assets,” said Clements.

Last year, the overall bottom line showed Edmonton Airports had net earnings of $1.1 million compared to a net loss of $3.1 million in 2002. The net earnings resulted primarily from a full year’s impact of an AIF rate increase from $10 to $15.

Real estate opportunities for the authority, which runs the Edmonton International Airport, Edmonton City Centre Airport, Villeneuve Airport and Cooking Lake Airport, centre around the International.

While development opportunities exist at all four, more than 90 per cent of that focuses on the International.

Real estate projects now under development at the International include the AirLINKS Business and AirLINKS Cargo Parks. The business park, once fully built, will provide 445 hectares of potential development space with room for light industrial, office and retail.

Currently, the Red Tail Landing Golf Club occupies 40 hectares and has plans to build a recreational vehicle park next door. A pending deal would see a third-party developer acquire a chunk of serviced land.

The cargo park, with FedEx as its anchor tenant, will eventually cover 52 hectares of airport land.

Meanwhile, the authority plans to add a hotel at the International, putting the airport in the same league as operations in Calgary and Vancouver. It has four different options and it’s a concept that has been on the table for eight years. The authority is now talking with investors.

Redevelopment of the International is also continuing, with three phases virtually complete at a cost of $265 million. The $20-million Phase 4A, the first part of renovations to the original north terminal, is under way and focuses on the rear of the building and its associated gates.

The remainder of Phase 4, which would overhaul the rest of the older building, will become reality when business conditions warrant. That also applies to Phase 5, three more parkade levels and Phase 6 – a longer-term project that would add a new concourse just north of the north terminal.

Always looking to improve service levels, Clements is hoping to land regularly scheduled flights to Europe. First up is Germany, while work will also continue on securing a London destination.

On the transborder side, America West introduces non-stop service to Los Angeles in June, bringing to seven the number of U.S. hubs served from Edmonton. Within 18 months, Clements hopes to add non-stops to Chicago and San Francisco.

“At that point our 750,000 passengers coming and going – that’s what we’ve identified as our market – will be optimally served. Anybody else we bring in will just rearrange the pie.”