IATA NBO Nairobi Airport Report FINAL Dec 2017

Jomo Kenyatta International Airport
Naroibi, Kenya
Non-Aviation Business Performance

Assessment
Report v1 Dec 2017
December 2017
Proprietary Notice
The information furnished in this document shall not be disclosed, duplicated or used in whole or in
part for any purpose other than to evaluate the document.
Contacts
For all communications concerning this Report, Mr. Marnix Groot, Manager IATA Consulting who is
responsible for this project remains at your disposal for any inquiries at the following coordinates:
Tel: +1 514 874 0202 ext.3234

Email: grootm@iata.org
Address: International Air Transport Association

800, Place Victoria, P.O. Box 113
Montréal, Québec, Canada, H4Z 1M1
Authors
This report was prepared by:
Mr. Johan Schölvinck
Mr. Marnix Groot
Non-‐Aviation Business Performance Assessment JKIA Nairobi Airport Report v1 Dec 2017 Page 2
December 2017
Table of Contents
INTRODUCTION .......................................................................................................................... 5
EXECUTIVE SUMMARY .............................................................................................................. 6
1. STEP 1: ASSESSMENT ...................................................................................................... 16

1.1 General facts .................................................................................................................... 16
1.2 General impression ......................................................................................................... 16
1.3 Total airport income from non-aviation business ........................................................ 18
1.4 Terminal concessions: Airside Retail ............................................................................ 20
1.5 Terminal concessions: Airside Food & Beverage (F&B) ............................................. 26
1.6 Terminal concessions: Airside Services ....................................................................... 30
1.7 Landside terminal concessions: Retail, F&B and Services ......................................... 31
1.8 Airside / Landside concessions: a comparison ........................................................... 33
1.9 Terminal concession management ................................................................................ 33
1.10 Car parking ..................................................................................................................... 34
1.11 Car rental ........................................................................................................................ 35
1.12 Advertising ..................................................................................................................... 35
1.13 Business and VIP lounges ............................................................................................ 36
1.14 Terminal Office rentals .................................................................................................. 38
1.15 Taxis ................................................................................................................................ 38
1.16 Landside Real Estate ..................................................................................................... 38
1.17 Customer journey touchpoints .................................................................................... 40
2. STEP 2: BENCHMARK ....................................................................................................... 44

2.1 Benchmarking Terminal concessions ........................................................................... 44
2.2 Airside and Landside F&B gross sales per international dep passenger .................. 46
2.3 Airport income from Retail and F&B (airside and landside) per dep passenger ....... 48
2.4 Area benchmark: Airside m2 per million dep pax ........................................................ 49
2.5 Area benchmark: Landside m2 per million dep pax ..................................................... 51
2.6 Category split: Airside Retail .......................................................................................... 53
December 2017
2.7 Category split: Airside F&B ............................................................................................ 55
2.8 Benchmarking other non-aviation business ................................................................. 56
3. STEP 3: RECOMMENDATIONS ......................................................................................... 63

3.1 Airside Retail .................................................................................................................... 63
3.2 Airside F&B ...................................................................................................................... 70
3.3 Customer journey ............................................................................................................ 74
3.4 Terminal concession management ................................................................................ 76
3.5 Car parking ....................................................................................................................... 81
3.6 Taxis .................................................................................................................................. 83
3.7 Car rental .......................................................................................................................... 86
3.8 Advertising ....................................................................................................................... 87
INDEX OF TABLES AND FIGURES .......................................................................................... 90
SOURCES .................................................................................................................................. 92
December 2017
Introduction
Kenya Airports Authority (henceforth: KAA) has requested IATA Consulting (henceforth: ‘we’) to
conduct a performance assessment of its airport non-‐aviation business at Jomo Kenyatta
International Airport in Nairobi (henceforth: NBO).

From October 30th – November 2nd, our team was received by the commercial team of NBO/KAA led
by Mr. Jimmy Kibati, General Manager Marketing and Business Development of KAA, including:
• Mr. Bernard Mogambi, Commercial Manager Retail & Concessions
• Mr. Anthony Kulei, Marketing Coordinator – Headquarters
• Mrs. Umi Luhindi, Marketing Coordinator – JKIA.

During our fact-‐finding mission they toured us around NBO, and organised interviews with relevant
colleagues. Their hospitality and openness in sharing information was outstanding, and we would
like to thank them again.

The outcome of this information sharing, our analysis and recommendations is laid out in this
report.

Methodology
The working method of our performance assessment has been as follows:

1.#Current# 2.#Best#Prac0ce# 3.#Advice##
•  Performance+ •  Yards5cks+ •  Strategy+

•  Areas+ •  Airports++ •  Space+&+layAout+
•  Contracts+ •  New+business+ •  Mix++
•  Partners+ •  Segments+ •  Tenant+rela5ons+
•  Strategy++ •  Partnerships+ •  Fit+with+opera5ons+
•  Customers+ •  Quick+wins+
experience++ •  New+Markets++
Assessment# Benchmark# Recommenda0ons#

This report follows the structure of this methodology.

December 2017
Executive summary

General impression
We have observed that KAA is very proud of NBO and we found that all staff were driven, capable
and forward-‐looking. KAA is keen on improving its non-‐aviation income. The airport has its
challenges with the circular design, but KAA overcomes them by being smart and creative and
generating the best possible outcome.

The welcome which a traveller receives at NBO on arrival, and the sense of place of Kenya on
departure, are warm and truly African. The Big Five animals on the pleasant greens all around the
airport are a striking feature.

Performance
The total airport income from non-‐aviation business in 2016 was about KES 2.7bn (EUR 22m).

KAA’s definition of ‘non-‐aviation’ includes some business segments which IATA Consulting considers
‘aviation’ business. They are:
• Rent and concessions from aviation partners: cargo, hangars, MRO, in-‐flight catering and
aircraft fuelling (included here as Cargo concessions, Cargo handling, Catering in-‐flight, Fuel
uplift and parts of Building rent);
• Aircraft and passenger handling revenue (included here as Ground handling and Cute
income).

Airport income from Airside Retail is EUR 2,64 with the bulk (EUR 2,04) coming from duty-‐free,
which reflects an average of about 35% share of gross sales (concession fee and fixed rent per m2)
which is good.

NBO has some 40 Retail (shop) units of which about 27 are airside and 13 are landside. The majority
of airside retail units in Terminal 1 are operated by several companies fitting the category of ‘duty-‐
free operator’, i.e. selling the categories liquor-‐tobaco-‐beauty-‐confectionery.

Given the circular design of Terminal 1, it is no easy feat to develop genuine market squares, where
passengers are exposed to Retail and F&B from all sides, similar to a ball bumping around in a
pinball machine. The only genuine market square is the new walkthrough-‐duty free store of Dufry in
Terminal 1A and the adjacent smaller independent stores. KAA has done this well and also took care
of a new type of contract for Dufry with a higher percentage fee of 20% of gross sales.

Other parts of Terminal 1 feature line stores which are closed shells full of various merchandise. At
some places stores are opposite each other, but that is more the exception than the rule, and most
of the times impossible to realise because of the narrow width of the concourse.

Most of the shops have tried to cram as many products in a small space that the passenger loses
overview and is put off from buying rather than seduced.

Still, we think there are opportunities to create some more ‘pinball effect’ by rearranging some of
the existing space.
December 2017
KAA does not have insight into the actual sales of the Retail shops, so it was impossible for us to
make a reasonably accurate estimate of the retail sales per departing passenger at NBO.

As far as Airport income from Airside retail is concerned, KAA charges the Retail concessionaires a
fixed rent per sqft of retail space and a MAG. Only in the new case of Dufry does the total fee
include a variable component: a MAG or a percentage of gross sales (concession fee), whichever is
higher, and a fixed rent per sqft of retail space.

We had to rely on the report of ADPI/APEX 1 of June 2017 to make an assessment of the current
retail areas airside: 846 sqm. However, this report counted 8 retail stores and we counted 26 units.
The same report estimates the airport income from retail to be 5-‐8% of total JKIA revenue, so they
too did not have exact numbers. Our assessment what the total airport income is from airside retail,
is therefore a guess.

The estimated Airside retail income per departing pax is KES 174 or EUR 1.41.
The estimated share of airside retail income of total NBO revenues in 2016/2017 is 5%.

The Airside Food & Beverage programme of NBO features 12 F&B outlets. These are spread over 5
airside departure areas. The number is rather low. Of these 12, 6 are also on a food court mezzanine
in Terminal 1A. NBO has no master concessionaires in F&B, so these 12 restaurants are all
individually (or in small clusters) managed.

As in every airport, the restaurants compete with the airline lounges. The Kenya Airways Pride
lounge in the pier/finger of Terminal 1A, given its quality, will be a stiff competitor.

With regards to the food court on the mezzanine in Terminal 1A:
• Any food court on a mezzanine at an airport is bound to suffer from the fact that 50% of the
passengers are simply not willing to go upstairs for fear of losing ‘visual control’ over their
departure gate.
• Having said that, KAA had no other options than to locate this food court on the mezzanine
because of sheer lack of space.
• Still, we have made some suggestions for additional F&B on the main level of Terminal 1A.
• The quality of the food offered by Amalca full-‐service restaurant is fine, as we were able to
observe.
• The hospitality and staff service is excellent. If one wants to be served with a genuine smile,
go to NBO.

As far as Airport income from Airside F&B is concerned, NBO charges the F&B concessionaires a
fixed rent per sqft of retail space, and no concession fee on gross turnover.

The estimated airside F&B income per departing pax is KES 41 or EUR 0.34.
The estimated share of airside F&B income of total JKIA revenues in 2016/2017 is 1%.

1
Commercial retail concept report, JKIA Refurbishment of Terminal 1B/1C/1D, by ADPi and APEC, 27 June 2017
December 2017
Airside Services: the airside programme at NBO features a multitude of services. The estimated
airside services income per departing pax is KES 12.4 or EUR 0.10. The estimated share of airsides
services income of total JKIA revenues in 2016/2017 is less than 0.3%.

Landside Retail, F&B and Services: the current landside business is modest. Space in the arrival halls
is very limited. The kiosks outside Terminal 1A look very worn, and are not the best welcome for
visitors. There are two restaurants between the parking garage and Terminal 1A which are pretty
well visited, appear to do good business and look modern.

The estimated landside Retail/F&B/Services income per departing pax is KES 29 or EUR 0.24.
The estimated share of landside Retail/F&B/Services income of total JKIA revenues in 2016/2017 is
0.7%.

Terminal concession management: in view of the KAA overall goal to increase income from non-‐
aviation business from 20% to 35% of total airport revenue, the commercial team is very committed
to execute its plans.

We would like to remark that restricting of products allowed to be sold by the concessionaires will
deliver significant improvement to KAA. Explicitly and exhaustively naming the products is common
practice among airports, so in this respect KAA has a long way to go.

We also recommend to group the duty-‐free concessions into one package, which will give probably
the biggest boost to all non-‐aviation income. A requirement is obviously that all contracts expire at
the same time. For this, some contracts could be temporarily extended until this moment appears.

Car parking is usually the second-‐highest source of non-‐aviation income after Airside Retail. NBO is
an exception as it collected KES 161m (EUR 1.3m) in parking revenues in 2016/2017. This is KES 45
(EUR 0.37) per departing passenger, and it amounts to 6.0% of total airport income from non-‐
aviation business, and 1.2% of overall airport income.

The reasons for this relatively low performance is that private car parking is considered very
expensive and the modal split of private car transport is low. Taxis and minibuses are very popular.

NBO has 2800 parking spaces of which about 2050 are near the Passenger Terminals (a parking
garage of 1300 pp and open-‐air parking 750) and 750 near the Cargo Terminal. A widely used
yardstick is that an airport has 1000 parking positions (pp) per 1m passenger movements. In that
respect, NBO behaves differently, with 394 parking positions. However, NBO is so close to the city
centre that using this benchmark is not considered appropriate.

Advertising: KAA manages the advertising itself. KES 239m (EUR 1,95m) was collected in revenues in
2016/2017, which amounts to about KES 67 (EUR 0,55) per departing passenger. This number is
healthy and at the high side of industry average. The range of advertising media is diverse and it
seems than many opportunities are addressed.

Airline and business lounges: NBO has mulitple airline and business lounges which are quite
popular. The highlight is the main Kenya Airways Pride lounge in Terminal 1A. It is very large and
occupies a very attractive place, namely the top floor of the pier/finger of 1A with a panoramic view
on the apron.
December 2017
We understood from KAA management that KAA does not earn money on all these lounges, i.e.
there is a fixed rental fee, but not a per-‐passenger charge. Many airports levy a per-‐passenger fee
because the lounge passenger actually represents a ‘lost sale’ in F&B but also in retail since many
lounge visitors don’t browse the commercial areas anymore.

So KAA in our opinion is smart and conforming to industry practice in implementing its proposal of
new levels of concession percentages and MAGs for passenger lounges.

Taxis: KAA has an agreement with a taxi company licensed to pick up passengers at the airport. We
assume that the revenues to the airport are included in ‘Ground transport’ which generated KES
23/7m in 2016/2017. It is unclear to us what the current fee system is. We understand that the
proposal is to levy a charge of KES 6,000 per vehicle per month. Whether this is on top of fee per
trip, we don’t know.

Landside Real Estate: Currently, the landside area north of the access road and west of the terminal
contains all the facilities that one might expect there such as hotels, catering facilities and logistics
companies. Interestingly enough, part of this land is in the hands of private developers. This area is
almost fully developed. Remaining plots of land are likely to be dedicated to freight/logistics
oriented activities.

Regarding future development potiential, an idea exists to dedicate a 16,000 acre site south of the
future parallel runway to the development of a medical resort city. Certain pre-‐requisites that would
make such a development feasible have been met. For example, NBO has an excellent location and
is well connected to the rest of Africa and selected cities in Europe and Asia. But there are many
questions and challenges as well. For example, there are competing developments elsewhere,
including in Africa. When jumpstarting a development which does not neccesarily play to exising
strengths in the economy, close coordination is necessary between the airport authority, all related
layers of government, educational institutions, investors. etc. There might be other more feasible
development options worth investigating. Examples are the development of a logistics zone focused
on high-‐value horticultural products. Another focus could be on the production of goods that are
carried by air cargo, such as medicine, computer chips and batteries.

South of Airport Road and north of the future Terminal Two, a strategic reservation should be made
for office blocks, convention and shopping facilities as well as a multi-‐modal transportation facility.
Currently the demand for those facilities is not there but this will change. NBO traffic will grow and
congestion in the city will get worse. This will make the airport location more attractive to work,
organise international meetings and for airport workers and passengers to shop on their way home.

As to increase the catchment area for these services and facilities, NBO’s accessibility and centrality
needs to be increased by developing new access links to surrounding comunities and the hinterland.
Currently security is an obstacle, but this will undoubtedly improve with the introduction of new and
more efficient security technologies.

Under the heading of “Customer journey”, we shared our impressions on some touchpoints along
the passenger journey from a customer’s point of view. These were on:
• Airport brand
• Landside departures:
o Check-‐in
December 2017
o Security
• Airside departures:
o Closed gate rooms
o Gate branding
o Passengers are not seduced to spend money
• Arrival:
o Immigration
o Reclaim area.

Benchmark
We compared NBO against a group of world airports. Within Africa, we were only able to retrieve
information about the three main South African airports KNB, CPT and DUR.

We were not able to compare NBO’s gross sales per head in retail and F&B because KAA does not
collect these data. However, we did include benchmark tables for these KPI’s for KAA’s furture
benefit.

In Airside and Landside income in Airside Retail and F&B per departing passenger, NBO generates
EUR 1.86. NBO scores reasonably well in the benchmark, and beats the American airports of ORD,
JFK and ATL, plus DUR and DEL. Outperforming large American airports is not difficult since these
hardly have retail sales (F&B is the main driver). However, beating DUR and DEL is an achievement.
Of course, there is plenty of room for NBO to grow.

Airside area benchmark: NBO seriously underperforms in both Retail (-‐74%) and F&B (-‐69%)
departments. The allocation of space over Retail (51,5% vs the benchmark of 60%) and F&B (38,1%
vs the benchmark of 37,5%) is however exemplary.
How does NBO’s area composition look for the future? We have taken two growth scenarios to
calculate passenger traffic for 2020 and 2025. One is a modesy growth of 3.0%. The other more
aggressive scenario is 6.0%. Inevitably, when growing at a modest 3.0%, NBO further aggravates its
lack of space in both Retail (-‐76% and -‐80%) and F&B (-‐72% and -‐76%) departments in 2020 and
2025 respectively.
When growing at an aggressive 6.0%, the situation gets even worse. NBO further aggravates its lack
of space in both Retail (-‐79% and -‐84%) and F&B (-‐75% and -‐81%) departments in 2020 and 2025
respectively.

Landside area benchmark: NBO seriously underperforms in both Retail (-‐77%) and F&B (-‐50%)
departments. The allocation of space over Retail (12% vs the benchmark of 25%) and F&B (64% vs
the benchmark of 60%) is however fine, although Retail could increase a bit (notably with typical
landside retail such as a convenience store, a pharmacy and a news & books store).

When growing at a modest 3.0%, NBO further aggravates its lack of landside commercial space
space in both Retail (-‐80% and -‐83%) and F&B (-‐56% and -‐62%) departments in 2020 and 2025
respectively. Inevitably, when growing at an aggressive 6.0%, the situation gets even worse. NBO
further aggravates its lack of space in both Retail (-‐82% and -‐87%) and F&B (-‐60% and -‐70%)
departments in 2020 and 2025 respectively.

December 2017
In the Airside Retail category benchmark we looked at the spread of the shopping product
categories at NBO over ‘consumer buying categories’:
• Shopping (predetermined)
• Impulse
• Profile (local products i.e. ‘sense of place’, uniqueness)

NBO performs very well in line with the benchmark. The Souvenir category with 12% may seem
rather large, but bear in mind that: a) locally handcrafted items are very popular; and b) the industry
average contains very large airports where the souvenir category simply can’t be that big.

In the Airside F&B category benchmark we looked at the spread of the Airside F&B offer at NBO
over the time that passengers take to stay (their dwell-‐time). They are the following categories:
• 10 minutes: standing ‘to go’ (‘grab and go’) conceps such as kiosks and small coffee bars;
• 10-‐40 minutes: the biggest category with:
o Fast-‐food/quick service branded and non-‐branded concepts
o Coffee/pastry/sandwiches
o Bars: beer, wine & tapas, champagne & caviar, cocktails
• 40 minutes: casual sit-‐down full-‐service restaurants.

NBO performs well in line with this benchmark.

We also compared NBO’s performances in car parking and advertising to best practice, and
included a table for car rental although there were no figures for this from KAA.

Recommendations
For Airside Retail, we included recommendations concerning:
• Cope with/alter the closed shells full of various merchandise.
• Opportunities to create some more ‘pinball effect’ by rearranging some of the existing space.
• Restriction of products allowed to be sold by the concessionaires.
• Group the duty-‐free concessions into one package, which will give probably the biggest
boost to all non-‐aviation income.
• Open up closed gate rooms.
• Increase the 20% concession fee of gross revenues for the duty-‐free retailer(s) in the future.

We were asked our opinion about the schemes proposed by ADPi/APEC in their document of 27
June 2017. We provided our comments on the:
• General concept
• Forecourt roads and kerbside
• Airside departures commercial schemes: This creates five different market squares in
Terminal 1B-‐C-‐D which has currently none. This will build up critical mass of passengers, keep
them interested to spend, reduces their travel stress and makes their journey altogether
more pleasant. It will for sure signify a major boost to commercial revenues for KAA.
However, we do see improvements to the plan concerning five market squares in the airside
departures area. In summary, these should be more a mix between Retail and F&B than in the plan.
We refer to Chapter 3. Recommendations, for the details.

December 2017
We also included recommendations for the further improvement of the performance of the
walkthrough duty-‐free store by Dufry, the biggest moneymaker.

As far as Airside F&B is concerned, we developed several ideas:
• Convert a gate room next to the Dufry store.
• Convert more space on the other side of the Dufry store.
• Create a market square in Terminal 1C.
We consider these ideas QUICK WINS.

In addition, we listed recommendations for the food court in Terminal 1A about:
• The introduction of flight information display screens (FIDS) which are now absent.
• Attracting more passengers to the mezzanine with a staff member handing out vouchers at
the bottom of the escalators.

Terminal 1D does not have any F&B at all. Depending on the traffic, we recommend to at least have
a mobile cart or food kiosk there.

We also think that creating a more ’mobile food’ will be a very good idea.

Our recommendations on the Customer journey appear in several paragraphs, and we included
some more about:
• Gate branding
• Piano
• Chess table
• Wifi.
As to the topic of Terminal concessions management, we were specifically asked by KAA to look at
the various existing contract forms for terminal concessions around the world, and then see where
NBO stands.

We described the four different models to operate terminal concessions have different risk/reward
profiles and vary with the maturity of the business, the time horizon of the partners, and the
operational influence of the airport on the business.

KAA is already well underway to changing its rent/concession fee structure into something more
variable, with the new plans in place, some of which have already been implemented, notably the
Dufry contract.

Marketing: KAA has an open and active relationship with its concessionaires. To cement the
business partnership even further, we recommend considering the development a Marketing
Committee. Such a Marketing Committee is a common institution at some of the larger airports in
the world. It is part of a list of Marketing and Promotion initiatives which generally comprise:

Marketing & Promotions
§ Marketing communications plan
§ Targets
§ Customer behaviour
§ Internal organisation
December 2017
§ Marketing Committee
§ Communication tools
§ Communication budget
§ Communication Calendar

We include recommendations and working methods on all these initiatives.

Regarding car parking, we provided ideas on ancillary business on expanding services for cars, some
of which can be organised within the parking garage. We also provided best practice car parking
examples from elsewhere in the world.

Taxis: on specific request by KAA, we have included sheets from a presentation on the way of how
an airport may cope with the fast growing business of Transportation Network Companies (TNCs)
such as Uber and Lyft.

Although the car rental business is small at NBO, it may grow in future and that is why we have
included recommendations, for instance on the question: should KAA limit its number of car rental
operators or not?

Finally, for advertising, we reiterated the pros and cons of managing your own advertising and
would like to repeat our recommendation to KAA to keep doing this, in general, to retain control.
Having said this, many airports are outsourcing the digital advertising on some of their in-‐house TV
screens. We addressed the question: should airports outsource the digital side of their advertising
space?

Further support from IATA Consulting
We would be delighted to offer KAA continued support to grow its non-‐aviation business along the
recommendations provided above:

• Walkthrough duty-‐free: solutions to increase performance.
• Airside Retail: ideas for improvement.
• Airside F&B: solutions, in particular the QUICK WINS suggested.
• Landside: plans for smart addition of Retail and F&B.
• Support in reviewing/helping to improve the plans of ADPi/APEC for the commercial
refurbishment of Terminals 1B-‐C-‐D.
• Car parking: new services.
• Car rental: methods to grow this business.
• Advertising: support with potential alignment with external digital media partners.
• Landside real estate feasbility study
• Contracts: ideas to convert into a concession fee structure with higher fees, and pooling the
duty-‐free packages into one.
• Marketing and Promotions: support with the development of a Marketing Committee and
other initiatives.
• Customer journey: seducing passengers to shop more.
• Training: providing dedicated workshops and courses for all KAA staff on location.

December 2017

December 2017
Step 1: Assessment
December 2017
1. Step 1: Assessment

1.1 General facts
NBO or Jomo Kenyatta International Airport (JKIA) is an international airport operated and wholly
owned by Kenya Airports Authority, which manages eleven civilian airports and airstrips in Kenya, of
which Mombasa and Kisumu are the next biggest airports after NBO.

NBO is the main gateway to and from the country and is situated 15km southeast of Nairobi’s
central business district. The airport’s passenger traffic in 2016 reached 7.1m and good
opportunities for further growth are in sight.

The key facts of the passenger traffic composition at NBO in 2016 are:
• Total departing passengers 2016: 7.1m, of which 5.4m international and 1.7m domestic.
• Kenya Airways (KQ) has 60% of the traffic including its SkyTeam partners (KLM etc).
• Other major airlines are: Emirates, Turkish Airlines, British Airways and Ethiopian Airlines.

The geographical spread of NBO’s international traffic is as follows:

2016'Int.'Pax.'cluster'Share'JKIA''

Indian'Ocean'
Islands'
Far'East' 6%'
7%'
East'&'Central'
Africa'

West'Africa'
27%'
5%'
Middle'
East' Southern'Africa'

19%'
Europe'
12%'
20%' North'Africa'
4%'

1.2 General impression
We have observed that KAA is very proud of NBO and we found that all staff were driven, capable
and forward-‐looking. KAA is keen on improving its non-‐aviation income. The airport has its
challenges with the circular design, but KAA overcomes them by being smart and creative and
generating the best possible passenger journey.

Images of the curbside at Jomo Kenyatta International Airport
December 2017
The welcome which a traveller receives at NBO on arrival, and the sense of place of Kenya on
departure, are warm and truly African. The Big Five animals on the pleasant greens all around the
airport are a striking feature.
Big Five animals welcoming the traveler at NBO

The circular shape of the terminal is something with which the current airport management is often
struggling from a commercial perspective, but coping remarkably well.

View on the landside terminal forecourt from Terminal 1D

The fire on 7 August 2013 destroyed the central
buildings within the landside ring of the airport
(picture right: the old situation in 2006). From 2008
when Kenya Vision 2030 was launched there has
been a plan for a greenfield terminal. However, in
2016 this plan has been put on hold. KAA has
meanwhile engaged ADPi and APEC to develop plans
for a refurbishment of Terminal 1C-‐1C-‐1D. KAA has
asked us to formulate an opinion about their ideas,
which this report addresses in a separate section.
December 2017

The four main departure sections of Terminal 1 (A, B, C and D) all have their own characteristics.
Terminal 1A has been recently upgraded with a walkthrough duty-‐free store by Dufry, and is the
most modern section of Terminal 1. Terminal 1D is a recent low-‐cost structure. Terminal 1E is the
arrival facility for Terminal 1.

Terminal 2 is located at some distance from Terminal 1 and is built with similar materials as
Terminal 1D. Terminal 2 accommodates the low-‐cost carriers at JKIA.

While the configuration of the 6 terminal parts is not ideal, our impression is that the system works
very well operationally.

Commercially however, KAA has set its sights on a drastic improvement of its performance. In
2016/2017, total revenue of KES 13.6bn (EUR 113m) was distributed as follows:

Table 1 Total KAA revenues
Revenue$Data$2016/2017$
Aeronau5cal$$ Non9Aeronau5cal$$ Other$Income$
4%$
20%$
76%$

The international benchmark for non-‐aviation revenues is around 40%, so KAA has some way to go.
We were KAA’s goal is to increase the non-‐aviation share to 35%.

Performance
The next paragraphs cover the current (2016 full year) performance of the non-‐aviation business at
NBO in all its sectors, and discuss the goals of KAA.

1.3 Total airport income from non-aviation business
The total airport income from non-‐aviation business in 2016 was about KES 2.7bn (EUR 22m) split in,
and distributed as follows:

December 2017
Figure 1 Non-‐aviation business income (numbers) 2

Non$Aeronautical.Sources.at.JKIA...
!500.000.000!!

!450.000.000!!

!400.000.000!!

!350.000.000!!
!300.000.000!!

!250.000.000!!

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Figure 2 Non-‐aviation business income (percentages) 3
Non%A%Aeronau?cal%Revenue%%by%Catergory%2016/17%
Animal%Holding%Fees% Facilita?on% Land%Rent%
0%% Concessions% 6%%
Car%Parks%Income% 1%%
6%%
Duty%Free%Income% Building%Rent%
3%% 22%% Cargo%Concessions%
5%%
Fuel%UpliH%
11%%
Cargo%Handling%

Cute%Income%
1%% 8%%
Ground%Transport%
1%% Retail%Income%
14%%
Ground%Handling%
6%%
Adver?sing%Income%

Catering%InAFlight%
8%% 9%%

2
Source: Stakeholder – Consolidated presentations.pptx, Sep 2017, made available by KAA.
3
Source: Statistics 2014-‐2016.xlsx, made available by KAA.
December 2017

Notes:
• Definitions of what is ‘aviation’ and ‘non-‐aviation’ business vary from airport to airport.
• KAA’s definition of ‘non-‐aviation’ includes some business segments which IATA Consulting
considers ‘aviation’ business. They are:
o Rent and concessions from aviation partners: cargo, hangars, MRO, in-‐flight catering
and aircraft fuelling (included here as Cargo concessions, Cargo handling, Catering in-‐
flight, Fuel uplift and parts of Building rent);
o Aircraft and passenger handling revenue (included here as Ground handling and Cute
income).
• The charts above then correspond to the total revenue from non-‐aviation business which
KAA uses itself.

1.4 Terminal concessions: Airside Retail
NBO has some 40 Retail (shop) units of which about 27 are airside and 13 are landside.

The majority of airside retail units in Terminal 1 are operated by several companies fitting the
category of ‘duty-‐free operator’, i.e. selling the categories liquor-‐tobaco-‐beauty-‐confectionery. They
are:

• Dufry Kenya
• Maya Duty Free
• Suzan Duty Free
• Safari Duty Free
• Siamanda Duty Free.

Other concessionaires are:
• Chemist -‐ drugstore
• Cross Culture Crafts – souvenirs
• Beth International – souvenirs, fashion and jewelry
• Zephyr House – souvenirs, fashion and jewelry
• Glamour House -‐ souvenirs, fashion and jewelry
• Goldrock Duty Free – coffee, souvenirs, jewelry
• Chapex Travellers Secretary – convenience store
• Hand Carvers Gallery -‐ souvenirs, fashion and jewelry
• Nippon Bookshop – news and books.

The shops are scattered around the four departure sections of Terminal 1. This is in part due to the
circular shape of the building, in part due to a lack of planning a genuine central market square.
Having said that, KAA has developed one: since 2016 Terminal 1A features a walkthrough duty-‐free
store operated by Dufry Kenya. This has also led to a different approach in the retail contracts (more
about this later in this report).

December 2017
The following images provide an impression of the various airside retail precincts in Terminal 1:

The Dufry Kenya walkthrough store in Terminal 1A

Zephyr House and Safari Duty Free in Terminal 1B
December 2017
Maya Duty Free and Suzan Duty Free in Terminal 1B

Clockwise from top: Terminal 1C selected stores Nippon Bookstore, Maya Duty Free, Luxury leather shop and Suzan Duty Free
December 2017

Safari Duty Free in Terminal 1D

Airside Retail: observations
• Given the circular design of Terminal 1, it is no easy feat to develop genuine market squares,
where passengers are exposed to Retail and F&B from all sides, similar to a ball bumping around
in a pinball machine. The only genuine market square is the new walkthrough-‐duty free store of
Dufry in Terminal 1A and the adjacent smaller independent stores. KAA has done this well and
also took care of a new type of contract for Dufry with a higher percentage fee of 20% of gross
sales.
• Other parts of Terminal 1 feature line stores which are closed shells full of various merchandise.
At some places stores are opposite each other, but that is more the exception than the rule, and
most of the times impossible to realise because of the narrow width of the concourse.
• Still, we think there are opportunities to create some more ‘pinball effect’ by rearranging some
of the existing space. We will address that in Chapter 3. Recommendations.
• Most of the shops have tried to cram as many products in a small space that the passenger
loses overview and is put off from buying rather than seduced.
• We noticed there was hardly any back of house-‐space for the retailers, and that their staff had
to restock in full view of the passengers, which is not conducive to increase sales.
• No less than five operators (Dufry, Maya, Suzan, Safari and Siamanda) fall under the ‘duty-‐free’
category and sell a colourful variety of liquor, tobacco, perfumes, cosmetics and confectionery,
plus assorted merchandise such as fashion and souvenirs whenever they have space left on their
shelves. We understand that there is no particular product range defined in their contracts, and
this explains why they are competing with each other. To a first-‐time visitor (like us) this creates
confusion, because 1) usually there is only one duty-‐free operator at an airport; 2) it is not clear
from the storefronts what the shops are selling, so you have to enter to find out; 3) price tags
are sometimes missing.
• As a result, passengers are ‘stimulated’ to compare prices in other stores and even
bargain. Now, this is a good system in shopping malls where visitors come to shop
and not to fly. At airports, it creates a lot of confusion and that is the no. 1 killer of
spending.
December 2017
• We checked the price of a particular product in all the duty-‐free stores: the Captain Morgan
black rum which was available nearly everywhere. To our surprise, it was sold at four different
prices: USD 12.00 at Safari DF, USD 14.00 at Maya DF, USD 15.00 at Suzan DF and even USD
21.00 at Dufry. This confuses passengers hugely and we would advise KAA to regulate this
immediately by contract.
• Apart from the Dufry store, we were impressed by the modern appearance of the luxury leather
shop in Terminal 1C and the clear, spacious lay-‐out of the Safari Duty Free shop in Terminal 1D.
These could be an example for the appearance, assortment and lay-‐out of the other stores.

1.4.1 Airside Retail: spend per head
KAA does not have insight into the actual sales of the Retail shops. Only recently has a new contract
with Dufry Kenya been concluded which arranges for Dufry to report its gross sales on a monthly
basis, also to be checked by KAA through its POS (point of sale) system. KAA now has a data history
of one year of the sales of Dufry, which however was not shared with us.

The new contract with Dufry calls for a MAG (minimum annual guarantee) of USD 3.5m per year or
20% of gross sales, whichever the higher. We understand that the USD 3.5m point has not been
reached yet, so the MAG is charged.

But even with this information, it is impossible to make a reasonably accurate estimate of the retail
sales per departing passenger at NBO, even for Dufry. Let alone for all the other stores, which pay a
fixed rent per square foot of space.

Whatever the case, we are unable to assess the retail spend per departing passenger at NBO.

In our opinion, it is essential that KAA is aware of the actual sales, because it:
• means it will have installed concession-‐type contracts and POS systems everywhere;
• changes KAA in becoming a genuine business partner with its concessionaires, with the joint
focus firmly on increasing sales volume, instead of focusing on fixed rent and margins as
landlord and tenant;
• allows KAA to benchmark its sales performance with best practice elsewhere;
• aligns KAA commercial management with the saying: “when you can measure it, you can
improve it.”

1.4.2 Airside Retail: spend per category
For the same reasons, we do not know what the retail spend per category is (liquor, tobacco,
beauty, confectionery, jewelry, fashion, electronics, news and books etc), and have therefore not
been able to perform an analysis or benchmark.

December 2017
1.4.3 Airside Retail: Airport income

NBO charges the Retail concessionaires a fixed rent per sqft of retail space and a MAG. Only in the
new case of Dufry does the total fee include a variable component: a MAG or a percentage of gross
sales (concession fee), whichever is higher, and a fixed rent per sqft of retail space.
It is unfortunately not clear which share of airside retail income KAA has administrated under
‘Building rent’ and which share under ‘Duty free income’ and ‘Retail income’. We assume that only
the income from Dufry is represented under ‘Duty free income‘ (KES 341m from July 2016-‐June
2017, or EUR 2.8m) and that payments by all other retail concessionaires fall under ‘Retail income’
(KES 89m or EUR 717,000) and ‘Building rent’ (KES 449m or EUR 3.8m).

We were only provided with the proposed new rent per sqft per month (KES 2,640 per sqft = KES
28,417 per sqm = EUR 231 per sqm), and not with the current rent. We therefore assume the
current rent is KES 2,000 per sqft per month.

We had to rely on the report of ADPI/APEX 4of June 2017 to make an assessment of the current
retail areas airside: 846 sqm. However, this report counted 8 retail stores and we counted 26 units.
The same report estimates the airport income from retail to be 5-‐8% of total JKIA revenue, so they
too did not have exact numbers.

Our assessment what the total airport income is from airside Retail, is therefore a guess.

We estimate the KAA income from airside retail at JKIA for 2016-‐2017, and the income per
departing passenger, as follows:

Table 2 Airside Retail income
Income component KES EUR

Retail fixed rent in ‘Building rent’ 219m 1.8m
Dufry MAG under ‘Duty free income’ 341m 2.8m
MAGs of other retailers under ‘Retail income’ 89m 0.7m

Total retail income 649m 5.3m

Total airside retail income (assumed 95% of total) 617m 5.0m

Total airside retail income per departing pax 174 1.41

è the estimated airside retail income per departing pax is KES 174 or EUR 1.41.

è the estimated share of airside retail income of total JKIA revenues in 2016/2017 is 5%.

Observations:
4
December 2017
New plans for rent/concession: KAA has proposed 5 new levels of concession percentages, MAGs
and rent per sqft. They are for airside retail (all called ‘Duty-‐free’):
• Concession percentage of gross turnover: 20%
• MAG: to be tendered
• Fixed rent per sqft per month: KES 2,640 for T1A and KES 2,400 for all other airside
departure areas.

1.5 Terminal concessions: Airside Food & Beverage (F&B)
The airside arena of NBO features 12 F&B outlets, distributed as follows:

Terminal 1A: 9 units
• Yog ice cream (pier/finger, upper level)
• Avanti restarant (pier/finger, lower level)
• Food court (mezzanine level): 6 units – Mango Plus, Hardee’s, C Café, Ro-‐Ro Chinese
restaurant, SubZone and Amalca
• Java House (end of concourse near 1B)

Terminal 1B: none

Terminal 1C: 1 unit
• Generic take-‐away restaurant near gate 4

Terminal 1D: none

Terminal 2: 2 units
• C Café
• Table 49

Below is a visual impression of these airside F&B units:

5
Yog in the pier/finger of Terminal 1A (upper level) Avanti restaurant in the pier/finger of Terminal 1A (lower level)
December 2017

Mezzanine foodcourt in Terminal 1A with Amalca restaurant, Mango Plus, Hardee’s, C Café and Ro-‐Ro.

Mezzanine foodcourt in Terminal 1A with the counter of Java House in Terminal 1A
Amalca
Generic restaurant in Terminal 1C C Café in Terminal 2
December 2017

Observations
• The total number of F&B units of 12, spread over 5 airside departure areas, is rather low. Of
these 12, 6 are also on a food court mezzanine in Terminal 1A.
• Terminal 1B has no F&B which is strange given the number of gates served.
• Terminal 1D also has no F&B, which can be explained from the low number of passengers
departing from there.
• NBO has no master concessionaires in F&B, so these 12 restaurants are all individually (or in
small clusters) managed.
• As in every airport, the restaurants compete with the airline lounges. The Kenya Airways
Pride lounge in the pier/finger of Terminal 1A, given its quality, will be a stiff competitor.
• With regards to the food court on the mezzanine in Terminal 1A:
o Any food court on a mezzanine at an airport is bound to suffer from the fact that
50% of the passengers are simply not willing to go upstairs for fear of losing ‘visual
control’ over their departure gate. This has been carefully measured at Hamburg and
Budapest Airports and is observed by other operators elsewhere. Of the 50% that do
make it upstairs, at most only half spend, leading to a penetration rate of F&B of
only 25%, where 50% or upwards is normal for same-‐floor F&B. A food court on a
mezzanine may work well in a shopping mall, but not at an airport.
o Having said that, KAA had no other options than to locate this food court on the
mezzanine because of sheer lack of space.
o Still, we have some suggestions for additional F&B on the main level of Terminal 1A
which we will address in Chapter 3. Recommendations.
o The quality of the food offered by Amalca full-‐service restaurant is fine, as we were
able to observe.
o The hospitality and staff service is excellent. If one wants to be served with a
genuine smile, go to NBO.

1.5.1 Spend per head
Unfortunately, KAA does not collect the sales figures from its F&B operators, so we were unable to
assess what the spend per head is.

1.5.2 Spend per F&B category
We were unable to assess spend per head figures, and therefore spend per F&B category.

However, we could observe something in the distribution of the F&B offer.
Most airports have Food & Beverage offers according to the time that passengers take to stay (their
dwell-‐time). They are the following categories:

December 2017

This typecasting provides the following distribution table for the Airside F&B range at NBO:

Table 3 Airside F&B units per dwell-‐time category
Category Units

10 minutes Yog ice cream (1A), C Café (1A food court)
10-‐40 minutes Avanti restaurant (1A pier/finger, lower level), Mango Plus (1A food court),
Hardee’s (1A food court), Ro-‐Ro (1A food court), SubZone (1A food court), Java
House (1A concourse), Generic restaurant (1C), C Café (2) and Table 49 (2).
> 40 minutes Amalca full-‐service restaurant (1A food court)

1.5.3 Airside F&B: Airport income
NBO charges the F&B concessionaires a fixed rent per sqft of retail space, and no concession fee on
gross turnover.

KAA informed us that this fixed rent is administrated under ‘Building rent’ (KES 449m or EUR 3.8m).

We were only provided with the proposed new rent per sqft per month (KES 2,640 per sqft = KES
28,417 per sqm = EUR 231 per sqm), and not with the current rent. We therefore assume the
current rent is KES 2,000 per sqft per month.

We had to rely on the report of ADPI/APEX 6of June 2017 to make an assessment of the current
retail areas airside: 626 sqm. However, this report counted 6 F&B units and we counted 12 units.

Our assessment what the total airport income is from airside F&B, is therefore a guess.

We estimate the KAA income from airside F&B at JKIA for 2016-‐2017, and the income per departing
passenger, as follows:

Table 4 Airside F&B income
Income component KES EUR

F&B fixed rent in ‘Building rent’ 162m 1.3m

Total F&B income 162m 1.3m

Total airside F&B income (assumed 90% of total) 146m 1.2m

Total airside F&B income per departing pax 41 0.34
6
December 2017
è the estimated airside F&B income per departing pax is KES 41 or EUR 0.34.

è the estimated share of airside F&B income of total JKIA revenues in 2016/2017 is 1%.

Observations:
and rent per sqft. They are for airside F&B:
• Concession percentage of gross turnover: 7.5% for Pubs and cafés, 10% for quick-‐service
restaurants and 12% for full-‐service restaurants;
• MAG: KES 0.5m for Pubs and cafés, KES 1.0m for quick-‐service restaurants and KES 2.0m for
full-‐service restaurants;
• Fixed rent per sqft per month: KES 2,640.

1.6 Terminal concessions: Airside Services
The airside programme at NBO features the following services:

• Sheri Palm beauty salon (1A)
• JKIA Hotspot counter (1A)
• Airtel counter (1A)
• Safaricom counter (1A)
• I & M Bank ATM (1B)
• Bureau de Change (1B)
• Children play area (1B)
• Port Health clinic (1B)
• Safaricom counter (1C)
• Airtel counter (1C)
• Smoking lounge (1C)
• Metropolitan bureau de change (1C) Sheri Palm beauty salon (1A)
• ATM (2)
• Various vending machines in all terminal parts.

The airline and business lounges are discussed separately in paragraph 1.13.

We estimate the total area dedicated to airside services to be 170 sqm.

The airport income derived from these services is administered by KAA under ‘Building rents’.

è the estimated airside services income per departing pax is KES 12.4 or EUR 0.10.

è the estimated share of airsides services income of total JKIA revenues in 2016/2017 is less than
0.3%.
7
December 2017
Observations:
and rent per sqft. They are for airside services:
• Concession percentage of gross turnover: 5% of financial gain for Banking services, 10% for
Forex services, 5% for Telecoms and 10% for beauty/wellness/spa;
• MAG: KES 1m for Banking services, KES 2m for Forex services, KES 250,000 for ATMs, and KES
1m for Telecoms;
• Fixed rent per month: KES 75,000 per vending machine unit, KES 300,000 for
beauty/wellness/spa and KES 300,000 for a salon/barber.

1.7 Landside terminal concessions: Retail, F&B and Services
We take the Retail, F&B and Services together because there are not so many facilities. An
overview:

• A cluster of 9 kiosks outside Terminal 1A featuring:
o Kairo Tours & Safari
o Capital Limo tours
o Avis car rental
o Express business travel group
o Yellow airport taxi
o Safaricom shop
o Telcom Kenya shop
o Airtel shop
o Barclays bank
• Jambo restaurant outside between Terminals 1D and 1E
• A cluster of kiosks in the arrival hall of Terminal 1E:
o TUI/Pullmans travel agency
o Express travel group
o Sarova travel agency
o Kenza bureau de change
o Kenya tourism centre
o Airtel
o Tai-‐Pan forex
o Smart airport transfers
o Safaricom
o ATMs
o Vending machines
• Facilities in Terminal 2:
o Java express coffee house outside
o ATMs
o Vending machines

8
December 2017
Observations:
• The current landside business is modest. Space in the arrival halls is very limited.
• The kiosks outside Terminal 1A look very worn, and are not the best welcome for visitors.
• There are two restaurants between the parking garage and Terminal 1A which are pretty
well visited, appear to do good business and look modern. This is also true for the Jambo
restaurant.

In the previous paragraphs on Airside Retail and F&B, we estimated the Landside Retail to be 5% of
the total Airside Retail income, and Landside F&B to be 10% of the total F&B income. With the
addition of rent from Landside Services, we estimate the following performance:

è the estimated landside Retail/F&B/Services income per departing pax is KES 29 or EUR 0.24.

è the estimated share of landside Retail/F&B/Services income of total JKIA revenues in 2016/2017
is 0.7%.

Barclays bank outside Terminal 1A Jambo restaurant outside Terminal 1D
Arrival services in Terminal 1E Java coffee house outside Terminal 2

December 2017
1.8 Airside / Landside concessions: a comparison

As a final note to this overview of the terminal concessions, let’s look at the comparative
performance of the airside and landside concessions:

Figure 3 Airside / Landside concession comparison: airport income
!200!!
!9!!(4%)!!
!180!!
!160!!
!140!!
Landside!in!KES,!2016!(and!%!of!terminal!
!120!! concessions)!
!100!! !174!!(68%)!!
Airside!in!KES,!2016!(and!%!of!terminal!
!80!! concessions)!
!60!! !4!!(2%)!!
!40!! !16!(6%)!!
!41!!(16%)!!
!20!! !12!!(5%)!!
!"!!!!
Retail! F&B! Services!

Observations:
This is quite a normal picture for airports, i.e. in African countries where airports landside
consumption (meeters & greeters, wellwishers and other visitors) is a bit higher than in Europe and
space is scarce. Airside income from concessions (NBO: 89%) is usually 10-‐15 times as large as
landside income (NBO: 11%). Gross sales per departing passenger may be 10-‐15 times larger, but
when it comes to concession fees, landside percentages are usually lower and the income
comparison rises to a factor 20. Even a mega-‐hub like Amsterdam Schiphol has this 20:1 ratio.

1.9 Terminal concession management
To conclude this session, a few words about the way that the KAA commercial team manages its
terminal concessions at NBO. Messrs Kibati, Mogambi and Kulei and Mrs. Luhindi informed us as
follows:

• In view of the goal to increase income from non-‐aviation business from 20% to 35% of total
airport revenue, the commercial team is very committed to execute its plans.
• The fees and concession percentages which KAA wants to levy have been formulated and
discussed in above paragraphs. Obviously, only when a current contract expires can a tender
be introduced to invoke these fees.
December 2017
• KAA looks at international best practice airports such as Amsterdam Schiphol, London
Heathrow, Singapore Changi etc for inspiration; closer by in Africa, it looks at Johannesburg
and Addis Abeba.
• We understand that once every quarter an information day is held with the concessionaires;
a more formal platform to exchange figures, ideas and issues. We confirm this is very good
and best practice among commercially well-‐run airports.
• KAA has organised its commercial department as follows:
o Business development: 9 persons
o Marketing: 6 persons
o Cargo: 3 persons
o PR and Communication: 6 persons

We would like to remark that restricting of products allowed to be sold by the concessionaires will
deliver significant improvement to KAA. Explicitly and exhaustively naming the products is common
practice among airports, so in this respect NBO has a long way to go.

We also recommend to group the duty-‐free concessions into one package, which will give
probably the biggest boost to all non-‐aviation income. A requirement is obviously that all contracts
expire at the same time. For this, some contracts could be temporarily extended until this moment
appears.

Other commercial management advice follows in Chapter 3. Recommendations.

1.10 Car parking
The car parking business is operated by NBO itself.

Car parking is usually the second-‐highest source of non-‐aviation income after Airside Retail. NBO is
an exception as it collected KES 161m (EUR 1.3m) in parking revenues in 2016/2017. This is KES 45
(EUR 0.37) per departing passenger, and it amounts to 6.0% of total airport income from non-‐
aviation business, and 1.2% of overall airport income.

The reasons for this relatively low performance is that private car parking is considered very
expensive and the modal split of private car transport at NBO is low. Taxis and minibuses are very
popular.

KAA has made a provision in its future tariffs to outsource car parking management: a concession
fee of 65% of gross revenues is then the target.

NBO has 2800 parking spaces of which about 2050 are near the Passenger Terminals (a parking
garage of 1300 pp and open-‐air parking 750) and 750 near the Cargo Terminal.
A widely used yardstick is that an airport has 1000 parking positions (pp) per 1m passenger
movements. In that respect, NBO behaves differently, with 394 parking positions.
However, NBO is so close to the city centre that using this benchmark is not considered appropriate.

December 2017

Observations:
• We confirm the view of NBO that parking demand will rise regardless of other modes of
transport becoming more available. Traffic growth seems unstoppable and passengers being
addicted to their car, will keep coming.
• From an income point of view, the parking garage opens opportunities for extra car services.
We will address those in Chapter Step 3. Recommendations.

1.11 Car rental
The car rental business is not very popular. Travelling around Kenya in a private car is apparently not
attractive.

Car rental revenues are not administered separately by KAA, so we cannot assess its performance.

As far as we could see, only Avis is present as concessionaire.

1.12 Advertising
KAA manages the advertising itself. KES 239m (EUR 1,95m) was collected in revenues in 2016/2017,
which amounts to about KES 67 (EUR 0,55) per departing passenger.

This number is healthy and at the high side of industry average.

The range of advertising media is diverse and it seems than many opportunities are addressed.

There are pros and cons to managing your own advertising. Most large airports in the world have
outsourced this business to an advertising concessionaire such as JC Decaux or Clear Channel. But
there are other mega-‐airports who prefer to handle advertising itself, such as Amsterdam Schiphol.
Regional airports more often than not manage it themselves too, because:

• The media messages at the airport are part of the customer journey and this is the core
product of the airport, and should not be left to third parties.
• Digital or analogue advertising is a reinforcement and accelerator of physical services such as
Retail and F&B, and therefore the airport should directly control it.
• Being creative with all physical advertising parts of the airport and digital platforms, should
be a core capability of the commercial management team and it should be involved with it at
all times, and therefore not outsource it.
• Advertising concessionaires are intermediates to brands, but they also deal with media
agencies as another intermediate – why leave part of the revenues with those
intermediates?

More on advertising in Chapter Step 2. Benchmark and Step 3. Recommendations.

December 2017
1.13 Business and VIP lounges

NBO has mulitple airline and business lounges which are quite popular.

Kenya Airways lounges
Terminal 1A features two Kenya Airways/SkyTeam lounges: the main Pride lounge which is very
large and occupies a very attractive place, namely the top floor of the pier/finger of 1A with a
panoramic view on the apron.

The m ain Kenya Airways/SkyTeam Pride lounge in Terminal 1A

The Simba lounge is a much smaller Kenya Airways/SkyTeam located on the mezzanine close to the
food court in Terminal 1A. It is less popular than the Pride lounge as it is further away from the
departure gates at 1A.

The secondary Kenya Airways/SkyTeam Simba lounge in Terminal 1A

Kenya Airways also has another Simba lounge in Terminal 1C.

Other lounges
The other lounges in the Terminal areas are:
December 2017
The Aspire Lounge in Terminal 1B

There is a “Premium Airport Lounge” next door to the KQ Simba Lounge in Terminal 1A (not
pictured) and a “VIP 2” lounge by the Government of Kenya in Terminal 1B opposite the Aspire
lounge (not pictured).

The Turkish Airlines/Star Alliance/Priority Pass Lounge in Terminal 1B
The Mt.Kenya Lounge (left) and the Mara Lounge (above) in Terminal 2
December 2017
Observations
We understood from KAA management that KAA does not earn money on all these lounges, i.e.
there is a fixed rental fee, but not a per-‐passenger charge.

Many airports levy a per-‐passenger fee because the lounge passenger actually represents a ‘lost
sale’ in F&B but also in retail since many lounge visitors don’t browse the commercial areas
anymore.

So KAA in our opinion is smart and conforming to industry practice in implementing its proposal 9 of
new levels of concession percentages and MAGs for passenger lounges:
• USD 5.00 fee per passenger with a MAG of KES 1m for airline lounges;
• USD 10.00 fee per passenger with a MAG to be tendered for CIP/VIP lounges.

1.14 Terminal Office rentals
NBO rents out office space within the terminal. However, it is unclear from the administration how
much space this is, who the tenants are and what the rental rates are. We can therefore not form an
opinion.

1.15 Taxis
KAA has an agreement with a taxi company licensed to pick up passengers at the airport. We
assume that the revenues to the airport are included in ‘Ground transport’ which generated KES
23/7m in 2016/2017.

It is unclear to us what the current fee system is. We understand that the proposal is to levy a
charge of KES 6,000 per vehicle per month. Whether this is on top of fee per trip, we don’t know.

KAA asked us to share some information on how airports cope with the fast-‐growing market of
Transportation Network Companies (TNC’s) such as Uber, Lyft etc.

We are happy to do that. In Chapter 3. Recommendations, we share some insights.

1.16 Landside Real Estate

Introduction
With airports typically surrounded by thousands of acres of undeveloped land which act as a
strategic reserve or environmental buffer for nearby residents, it has been recognised that many
airports are sitting on a potential goldmine of real estate opportunities. This land should be
developed with activities that add value to the airport location and that can help drive traffic
growth.
9
December 2017

Situation at NBO
The airside land north of the airport access road is largely developed with aviation related facilities
such as hotels, KAA HQ, catering facilities, freight forwarders, and even an Airport Trade Center,
clearly inspired by the airport city concept. A peculiar fact is that a large part of the most valuable
land, that bordering Airport Road is not under the control of KAA, but under the control of private
developers. Approximately 30% of land is still available for future development.

To the south of the airport access road is a large area of land fit for this purpose. The majority of the
available land will be used for the construction of a parallel runway, a future linear terminal which
will be constructed just south of Airport Road, as well as a cargo zone that will be located south of
the new runway, in the south-‐western zone of the airport.

Health/Medical City
South of the future parallel runway and cargo zone, a large 16,000 acre triangular shape tract of
land is available for future development. The current idea is to devote the majority of the land to
the development of a health resort city. The health resort city should attract medical ‘tourists’ from
all over Africa and beyond to undergo treatment.

At first glance, this seems like a sensible plan. Two important pre-‐requisites to enable such a
development have been met. Nairobi has an excellent central location and NBO has a strong hub-‐
carrier connecting NBO with most African capitals and selected cities in Europe and Asia. But there
are plenty of questions and challenges for such an undertaking to be succesful. Some of the issues
and questions that need to be considered are:

• Can NBO’s health resort city compete with similar developments elsewhere, such as Dubai,
and closer to home Accra, Ghana?
• Strategic partners will need to be found to make the necessary investments;
• Government support in the shape of legislation, tax incentives and other mechanisms will be
indispensable;
• Effective coordinating mechanisms, such as steering committees, as well as strategic
planning, and development initiatives will need to be set up;
• Is there plenty of highly skilled medical staff available in Kenya, and if not, how can they be
trained, or attracted from abroad?
• Can a high-‐grade, attractive working and living environment for both patients and medical
(research) staff be provided at the selected location?

Our recommendation is to have a separate feasibility study undertaken to answer these questions.
One of the golden rules for airport city developments to be succesful is to play on existing strengths
in the national and regional economy. It is possible to use the airport city concept to jumpstart and
develop entirely new economic activities, but it is not easy, and it will take a huge amount of effort,
money and close coordination between the KAA, national and local government, private investors
and market parties. Experience shows that this is hard to achieve in the most advanced of
economies, let alone a developing economy like that of Kenya.

Hence, we suggest that the feasibility study should investigate other development opportunities as
well. For example, research might show that a cargo and logistics cluster focused on the trade,
December 2017
storage and movement of horticultural products is much more feasible and has much more
potential. This also makes more sense from a planning point of view because the area borders on a
future cargo zone.

Another part of the zone could potentially be used for the production of high value goods that are
carried by air, such as medicine and high value IT and telecommunications equipment. The latter are
fully in line with the government’s Vision 2030 which has pinpointed these industries as future
growth sectors.

Other real estate potential
In the master plan a strategic reservation should be made in the area between Airport Road and the
future Terminal Two for office blocks, additional hotels, a convention centre and a landside
shopping centre, catering to passengers, airport workers and visitors. As traffic at NBO grows, and as
congestion in the city gets worse, the demand for these types of facilities will grow to a point where
they will be become feasbile and profitable.

The attractiveness of NBO as a location for business, shopping and leisure can be further enhanced
by increasing it’s accessibility and centrality, thereby increasing the catchment area for the services
and facilities at NBO. This should be done by constructing a multimodal hub in between Terminal
One and the Future Terminal Two and developing new road and rail links from the airport to other
parts of Nairobi and its hinterland.

We are fully aware that because of the security situation, it is currently desirable to have only one
access point at the airport, and to limit the number of people visiting the airport to people that
really have a good reason for being there. We are confident though that with the increase in smart
security technologies – and hopefully in the long run, less need for security – this obstacle can be
overcome.

1.17 Customer journey touchpoints
Under the heading of “Customer journey”, we would like to share our impressions on some
touchpoints along the passenger journey from a customer’s point of view. In this way we can
address topics not touched upon in the narrative thus far.

Airport brand
The customer meets the brand of KAA a few times during the customer journey, hopefully before
the travelling itself and (hopefully) long after. It is not prominent however, and we think that KAA
misses an opportunity here.

In addition, we think that there is merit in developing a separate “JKIA” brand, because:
• Nairobi is the point of entry and departure for the majority of Kenya’s visitors and residents,
and the identity of the airport will mean more to them than the ‘authority’ logo of KAA;
• JKIA can be used as an umbrella brand to market the commercial offer, and be used for
merchandising (e.g. a shopping bag for all shops has one side ‘JKIA’ branded; this is paid from
a joint marketing fund with the concessionaires – see Chapter 3. Recommendations);
December 2017
• JKIA can be ‘personalised’ as a brand and used for digital communication (social media,
airport app, website, e-‐commerce of airport retail and pre-‐booked parking, etc.).

Landside departures
• Check-‐in: although we were unable to experience it ourselves, apparently the check-‐in peaks
can have passengers standing in a queue all along the check-‐in hall. We did not ask whether NBO
does it, but many airports solve queue management with an abundance of tensator
(retractable) barriers and entrance gates with clear signage of the airline and destination. They
also deploy airport hostesses (not ground handling crew) to answer questions and gently move
people along the lines. This is obviously an investment. But every minute less in check-‐in queues
may mean 20 seconds of extra shopping airside. è this investment pays for itself through 1)
more minutes airside dwell time 2) = more shopping 3) happier customers; and 4) better word-‐
of-‐mouth PR for KAA.

• Security: we could experience the security checking area in Terminal 1A first-‐hand, and it was
smooth, friendly and working really well. We were impressed. The motto is: “Passing the
security ara should be as easy as a walk in the park.” Passengers indeed have a short
‘decompression zone’ before they enter the main shopping street, which is the Dufry
walkthrough duty-‐free store.

Airside departures
• Closed gate rooms: we noticed the many gate rooms which have glass walls and wondered if
this is still necessary from an operational/security point of view. If not, we recommend many
gate rooms to be opened to win valuable airside space. In fact, we have included ideas for
several areas to be commercially expanded throughout Terminal 1 in Chapter 3.
Recommendations.

• Gate branding: NBO has an opportunity to brand its gates. This is both an opportunity to collect
advertising income, as a wonderful tool to make the gate rooms friendlier and turn them into a
warmer, cosier environment with a real Kenyan sense of place.
We have seen two wonderful examples in the airport world: Tallinn Airport in Estonia and Taipei
Taoyan Airport Terminal 2. In Chapter 3. Recommedations, we will show some pictures of
Tallinn Airport. The way in which most of the gates at Tallinn Airport are turned into a cosy living
room, is magnificent.
Gate branding definitely has a very positive influence on the customer journey: it reduces stress,
extends the dwell time, converts the passengers to ambassadors of NBO, and ultimately
generates more sales.

• Passengers are not seduced to spend money: throughout Terminal 1, we found that passengers
are not seduced enough to spend money in Retail and F&B, for several reasons:
o There are no real market squares with the positive exception of the walkthrough duty-‐
free by Dufry in Terminal 1A, to build critical mass, expose customers to a commercial
offer from their seats, and generate the ‘pinball effect’;
December 2017
o A lot of gates are closed off with windows which hides valuable space, see above;
o The narrowness of the circular-‐shaped concourse makes it difficult to create attractive
market squares. However, there are opportunities where there are vertical circulation
points, unused gate space and outlook onto the apron.
o The shops in particular are mostly closed shells, looking pretty worn and packed full of
merchandise. This has been discussed earlier.
o The confusion caused by five duty-‐free retailers selling the same products at sometimes
different prices. This has also been discussed earlier.
o There is a lack of bright light from above in some of the corridors. This could be solved by
more intelligent LED light solutions, as well as with so-‐called ‘solar tubes’ which bring
sunlight from above fed through with a system of lenses and mirrors.
o We will address potential solutions this in Chapter 3. Recommendations.

Arrival
• Immigration: although we had a special treatment courtesy of very helpful KAA staff helping us
with our visas, we noticed that most passengers on our flight were assisted by the same friendly
staff who had many questions on visas and filling out forms. Passengers had experienced
problems with e-‐visa (there were fraudulent websites around) and they were helped in a most
courteous way so that the immigration process went smoothly.

• Reclaim area: from experience we can say this worked well. We would like to add a
recommendation below.
• For arriving passengers, the reclaim area is a ‘nuisance value’ i.e. you take for granted that it
is perfect and only notice when it is negative. The focus is on: “where is my luggage?”. And
this “always arrives late”, even though it doesn’t. People want to get out. It is the last
experience of the whole customer journey. If it is negative, people will tell their friends &
family and blame the airport for late luggage arrival – they don’t know, nor do they care, nor
should they, that it is done by a ground handling company paid by the airline.
• Add to this the fact that human beings can’t judge time passed by if it is more than 2
minutes. 3 minutes is perceived as 5, 5 minutes is perceived as 10, etcetera. Supermarkets
use this 2 minute-‐rule when to open a new checkout.
• Furthermore, we live in a world where the expectation is that we can get something right
now at the touch of a fingertip. We are always ‘in control’ and expect to be able to control
our entire environment. Waiting without any influence on the process is terrible.
• This is why smart airports have given control to the arriving passenger by saying when the
luggage arrives. It requires some
software and the actual delivery
may not always be right, but the
effects are startling: seeing the
message “…luggage arriving at
20.20…” is psychologically so
much better than seeing no
time at all. It is the same as the
time-‐ticker at zebra crossings:
you are made aware, so you are
in control.
December 2017
• The picture shown is from such a system at Amsterdam Schiphol Airport.

Step 2: Benchmark
December 2017
2. Step 2: Benchmark

In this chapter, we compare the key performance indicators (KPIs) of JKIA Airport (NBO) to other
airports and to best practice.
We distinguish between Teminal concessions and other non-‐aviation business.

2.1 Benchmarking Terminal concessions
We will benchmark the following KPIs:

1. Airport income from Retail and F&B (airside and landside) per departing passenger
2. Area benchmark: Airside sqm per million departing pax
3. Area benchmark: Landside smq per million dep pax
4. Category split: Airside Retail
5. Category split: Airside F&B

Normally, we also benchmark:
• Airside Retail gross sales per departing passenger (spend per head)
• Airside and Landside F&B gross sales per departing passenger (spend per head).

However, KAA does not have the gross sales data from its concessionaires, so this is something for
the future.

However, we do include a benchmark on these last two KPIs, but without NBO.

2.1.1 Airside Retail gross sales per departing passenger
(spend per head)

Since KAA cannot get sales data from its concessionaires (from 2016 onwards it is collecting though),
we cannot compare NBO performance to best practice.
Below however is a selection of airports, both from within Africa 10 as elsewhere:

Table 5 Overview of airports
Airport IATA Year Total Pax Intl Pax Retail Retail Type
Code Sales Per Sales Per
Departing Intl
Pax (EUR) Departing
Pax (EUR)
1 Seoul Incheon ICN 2016 57.765.397 57.152.206 62,67 63,34 All Retail
2 Singapore SIN 2015 55.450.000 55.450.000 46,42 46,42 All Airside
3 Narita NRT 2015 37.941.435 31.055.837 43,31 52,92 All Retail
10
We would have liked to include more African airports such as Addis Abeba, but were unable to find any commercial
data other than for the three South African airports Johannesburg, Cape Town and Durban.
December 2017
4 Dubai DXB 2016 83.654.250 83.654.250 41,29 41,29 All Retail

5 Abu Dhabi AUH 2015 23.300.000 23.300.000 36,56 36,56 All Retail
6 Hong Kong HKG 2016 70.516.000 70.516.000 23,29 23,29 All Airside
7 Shanghai Pudong PVG 2016 62.127.944 31.257.988 20,29 40,33 All Retail
8 Johannesburg JNB 2016 20.731.424 8.614.192 16,03 35,61 Duty Free/Duty Paid
9 Beijing PEK 2015 89.938.628 67.362.736 15,78 21,07 All Airside
10 Amsterdam AMS 2016 63.625.664 63.625.664 13,65 13,65 All Airside
11 Rome FCO 2016 41.700.000 29.200.000 12,23 12,23 All retail
12 Brussels BRU 2015 23.226.000 23.226.000 12,20 12,20 All retail
13 Los Angeles LAX 2016 80.921.527 22.850.164 8,53 30,22 All Retail
14 New York JFK JFK 2015 56.827.000 30.020.000 6,89 13,04 Duty Free/Duty Paid
15 New Delhi DEL 2016 48.400.000 14.200.000 5,73 19,54 Duty Free/Duty Paid
16 Madrid MAD 2014 41.823.000 29.619.000 4,46 4,46 Duty Free/Duty Paid
17 Atlanta ATL 2016 104.171.935 11.475.615 3,32 30,18 All Retail
18 Chengdu CTU 2016 43.700.000 6.000.000 3,07 5,12 Duty Free/Duty Paid
19 Cape Town CPT 2016 10.256.472 2.912.547 7,38 25,99 All retail
20 Durban DUR 2016 5.248.144 1.490.324 4,23 14,90 All retail

We have selected airports and periods for which we could source (i.e. what was available) certain
Retail sales data. These could be Duty-‐free/duty-‐paid sales, or all Retail sales.

Furthermore, reported Retail sales may be only derived from a certain group (international or
domestic or both) of passengers and therefore, sales per departing passenger must take that into
account.

Graphically in descending order, the comparison is:

Figure 4 Comparative Retail sales per DP

Airside'Retail'Sales'Per'Depar0ng'Pax'(EUR)'
70,00%
62,67%

60,00%

46,42%
50,00%

43,31%
41,29%

36,56%
40,00%

30,00%
23,29%

20,29%

16,03%
15,78%
20,00%
13,65%

12,23%
12,20%

8,53%
7,38%
6,89%
5,73%
10,00%
4,46%

4,23%
3,32%
3,07%

0,00%
ICN% SIN% NRT% DXB% AUH% HKG% PVG% JNB% PEK% AMS% FCO% BRU% LAX% CPT% JFK% DEL% MAD%DUR% ATL% CTU%
December 2017

Conclusions:
• It does not make sense to compare NBO to giants such as ICN, Sin, NRT or DXB. But it does
give an idea how far the passenger spending can be stretched in their circumstances.
• Possibly, the three South African airports JNB, CPT and DUR are good examples for NBO. CPT
and DUR seem comparable in traffic composition and size.

2.2 Airside and Landside F&B gross sales per international
departing passenger (spend per head)

Agan, since KAA cannot get sales data from its F&B concessionaires, we cannot compare NBO F&B
gross sales performance to best practice.
Below however is a selection of airports for which we are able to retrieve F&B data, both from
within Africa 11 as elsewhere:

We chose to focus on Total (Airside + Landside) F&B sales, because Landside F&B plays a major role
in an airport’s commercial portfolio, unlike Landside Retail.

Individual airport comparison
It is more difficult to find data for individual airports in F&B performance, than for Retail. We did
manage to find a selection, which is listed below.

Figure 5 Comparative Airside and Landside F&B sales per DP

Airside'and'Landside'F&B'Sales'Per'Depar3ng'

Pax'(EUR)'
7,36%
8%

7%

5,35%
5,35%
5,30%
6%
4,60%
4,58%
4,46%
4,35%
5%
3,71%

3,30%
3,25%
3,15%
4%

2,74%
2,41%
2,41%
2,23%
2,16%
2,15%
3%
1,92%
1,88%
1,80%
2%

1%

0%

N%
D%
N%
B%
M %
%
U%
G%
L%
U%
O%
B%
S%
T%
L%
X%
X%
T%
R%
R%
K%
G
AD
AT
DE
AM
CP
NR
DX
JN
LA
LA
OR
CD
DU
PV
LH
CT
BR
SI
IC
PE
FC
11
We would have liked to include more African airports such as Addis Abeba, but were unable to find any commercial
data other than for the three South African airports Johannesburg, Cape Town and Durban.
December 2017
Regional comparison
To complement the list of individual airports, we were able to develop airport F&B data per world
region through available free and for-‐sale studies:

Figure 6 Airside F&B sales per IDP: world regions
€ 7,00 € 6,35
€ 6,00
€ 5,00
€ 3,81
€ 4,00
€ 3,00 € 2,45
€ 2,07
€ 2,00 € 1,64
€ 1,27
€ 1,00
€ 0,00

NOTES:
1. These are Airside F&B Sales, excluding Landside sales, unlike the previous Figure 6.
2. IDP (international departing passengers) is the denominator, where it is DP (all departing pax) in the previous Figure
6.
3. African F&B figures were not available through ACRS studies or from direct operator sources; they were constructed
from regional averages through ACI's Economic Reports.
4. Asian-‐Pacific F&B gross sales per IDP are for airports of all sizes. In the various sources no split was available
between airports < 10 map, 10-‐30 map and > 30 map.
5. European F&B gross sales per IDP are for airports sized between 10 and 30 map. The figure for airports > 30 map is
EUR 4,93.
6. Latin American/Caribbean F&B figures were not available through ACRS studies or from direct operator sources;
they were constructed from regional averages through ACI's Economic Reports.
7. Middle Eastern F&B figures were not available through ACRS studies or from direct operator sources; they were
constructed from regional averages through ACI's Economic Reports.
8. North American figures were only available as gross sales from airside + landside per departing total passengers.
Domestic and landside sales are typically high in the US. The gross sales per IDP are therefore identical to the airside
gross sales per Domestic DP and the airside + landside gross sales per Total DP. The primary source of information is
the ACI North America annual concession benchmarking survey for Retail and F&B.

Conclusions:
• It is not expected that NBO will outperform the leaders in this pack.
• When KAA gathers F&B gross sales data in the future, it will be more meaningful to look at
comparable ACSA airports such as CPT and DUR, and ABB.
December 2017
2.3 Airport income from Retail and F&B (airside and

landside) per departing passenger

We now switch to the airport’s income from terminal concessions.
For this, we have data from NBO, at least some thorough estimates.

We prefer to aggregate the airport income from all airside and landside Retail and F&B, as this is the
most meaningful KPI concerning airport income from concessions.
Furthermore, actual concession fee details are among the most secretive data of airports. Many
publish either their sales or their income, but not both.
Variable fees can range between, say 40% to 10% depending on the location and the product.
Airports may have a large landside area with space for lots of Retail and F&B, or may not.
Total airport income divided by total departing passengers is then the best common denominator.

Table 6 Retail and F&B income per DP
IATA Year Retail and

Code F&B Income
Per Dep Pax
(EUR)
Amsterdam AMS 2016 4,20
Atlanta ATL 2016 1,15
Beijing PEK 2015 2,15
Brussels BRU 2015 2,48
Cape Town CPT 2016 2,46
Chicago O'Hare ORD 2014 1,45
Durban DUR 2016 1,41
Frankfurt FRA 2016 2,70
Johannesburg JNB 2016 3,12
London Gatwick LGW FY2016 3,55
London Heathrow LHR 2016 5,25
Los Angeles LAX FY2016 2,15
Nairobi NBO 2016 1,86
New Delhi DEL FY2016 1,20
New York JFK JFK 2015 1,35

Graphically in descending order, the comparison is:

Figure 7 Airport income from Retail and F&B per DP
Retail'and'F&B'Income'Per'Dep'Pax'(EUR)'

!6,00!!

!5,00!!

!4,00!!

!3,00!!

!2,00!!

!1,00!!

!"!!!!

S!
B!
A!
O!
D!
T!
U!
L!
X!
!
R!
R!
K!
K!
W
L
DE
AT
AM
CP
LA
JN
FR
OR
DU
LH
PE
JF
BR
NB
LG
December 2017
Conclusions:
• NBO scores reasonably well in this list, and beats the American airports of ORD, JFK and ATL.
plus DUR and DEL. Outperforming large American airports is not difficult since these hardly
have retail sales (F&B is the main driver). However, beating DUR and DEL is an achievement.
• Of course, there is plenty of room for NBO to grow.

2.4 Area benchmark: Airside m2 per million dep pax

The Airside (international) yardsticks are as follows:

INT$airside$benchmark: Retail F&B Services Total
m2#per#m#dep#pax #################### 900 ################# 562,5 ################## 37,5 ################# 1.500
60,0% 37,5% 2,5% 100,0%

This is the latest benchmark used by modern, new or expanding airports and their commercial
advisers.

How does NBO perform against this benchmark in 2016?

Table 7 Area performance against INT airside benchmark

m2#per#m#dep#pax #################### 900 ################# 562,5 ################## 37,5 ################# 1.500
60,0% 37,5% 2,5% 100,0%
Nairobi'airside'm2:
2016 currently '''''''''''''' 846 '''''''''''''' 626 '''''''''''''' 170 ''''''''''' 1.642
allocation 51,5% 38,1% 10,4% 100,0%

dep$pax
current'm2'per'm'dep'pax ************** 238 ************** 176 **************** 48 ************** 463 000003.550.000
current0m20over/under0benchmark ************* -662 ************* -386 **************** 10 ********** -1.037
% -74% -69% 28% -69%

Conclusions:
• NBO seriously underperforms in both Retail (-‐74%) and F&B (-‐69%) departments.
• The allocation of space over Retail (51,5% vs the benchmark of 60%) and F&B (38,1% vs the
benchmark of 37,5%) is however exemplary.
• These benchmark area numbers are slightly below the recommendations by ADPi/APEC in
their plan 12. They quote IATA with the above benchmark of 1.500 sqm per million departing
pax, but then recommends its own worldwide experience and advises ‘1.500-‐1.800 sqm per
m dep pax’. And takes the upper limit of this range for its calculations (projecting 7.000 sqm
12
Commercial retail concept report, JKIA Refurbishment of Terminal 1B/1C/1D, by ADPi and APEC, 27 June 2017.
December 2017
total concession space airside and landside for the total capacity of Terminal 1B-‐C-‐D of 7.8
mppa).

How does NBO’s area composition look for the future? We have taken two growth scenarios to
calculate passenger traffic for 2020 and 2025. One is a modesy growth of 3.0%. The other more
aggressive scenario is 6.0%.

Table 8 Area performance against INT airside benchmark: 3.0% growth
Modest
m2#per#m#dep#pax #################### 900 ################# 562,5 ################## 37,5 ################# 1.500
3.0% 60,0% 37,5% 2,5% 100,0%

req$in$2020$at$3%$growth: &&&&&&&&&&&&3.596 &&&&&&&&&&&&2.248 &&&&&&&&&&&&&& 150 &&&&&&&&&&&&5.993 &&&&&3.995.556
current&m2&over/under&benchmark &&&&&&&&&& ,2.750 &&&&&&&&&& ,1.622 &&&&&&&&&&&&&&&& 20 &&&&&&&&&& ,4.351
% ,76% ,72% 13% ,73%
req$in$2025$at$3%$growth: &&&&&&&&&&&&4.169 &&&&&&&&&&&&2.605 &&&&&&&&&&&&&& 174 &&&&&&&&&&&&6.948 &&&&&4.631.945

current&m2&over/under&benchmark &&&&&&&&&& ,3.323 &&&&&&&&&& ,1.979 &&&&&&&&&&&&&&&&& ,4 &&&&&&&&&& ,5.306
% ,80% ,76% ,2% ,76%

Conclusion: inevitably, when growing at a modest 3.0%, NBO further aggravates its lack of space in
both Retail (-‐76% and -‐80%) and F&B (-‐72% and -‐76%) departments in 2020 and 2025 respectively.

Table 9 Area performance against INT airside benchmark: 6.0 % growth
Aggressive m2#per#m#dep#pax #################### 900 ################# 562,5 ################## 37,5 ################# 1.500

6.0% 60,0% 37,5% 2,5% 100,0%
req$in$2020$at$6%$growth: %%%%%%%%%%%%4.034 %%%%%%%%%%%%2.521 %%%%%%%%%%%%%% 168 %%%%%%%%%%%%6.723 (((((4.481.793
current(m2(over/under(benchmark %%%%%%%%%% ,3.188 %%%%%%%%%% ,1.895 %%%%%%%%%%%%%%%%%% 2 %%%%%%%%%% ,5.081
% ,79% ,75% 1% ,76%
req$in$2025$at$6%$growth: %%%%%%%%%%%%5.398 %%%%%%%%%%%%3.374 %%%%%%%%%%%%%% 225 %%%%%%%%%%%%8.996 (((((5.997.650

current(m2(over/under(benchmark %%%%%%%%%% ,4.552 %%%%%%%%%% ,2.748 %%%%%%%%%%%%%%% ,55 %%%%%%%%%% ,7.354
% ,84% ,81% ,24% ,82%

Conclusion: inevitably, when growing at an aggressive 6.0%, the situation gets even worse. NBO

December 2017
2.5 Area benchmark: Landside m2 per million dep pax

The Landside yardsticks are as follows:

LANDSIDE(benchmark: Retail F&B Services Total

m2#per#m#dep#pax ###################### 75 #################### 180 ##################### 45 #################### 300

25,0% 60,0% 15,0% 100,0%
This is the latest benchmark used by modern, new or expanding airports and their commercial
advisers.

Landside total commercial space required:
• 20% of the (average) airside international space parameter for O/D passengers.
• This 20% comes on top of the airside space.

Formula for Nairobi Airport:

{Share of INT pax * 20% of INT Airside space parameter} =

{100% * 0,2 * 1.500m2} =
300 m2 required commercial space landside per million departing total

passengers (MDP).

Arrival hall/Check-‐in hall split:
In countries with a strong wellwisher culture (Africa, Asia, Middle East) IATA Consulting uses a 70%
arrival-‐30% check-‐in split. In countries with less wellwishers (Europe, North America): 80%-‐20%.

For NBO, this means:

è Arrival hall: 70% * 300m2 = 210 m 2 per MDP.
è Check-‐in hall: 30% * 300 = 90 m2 per MDP.

The allocation per category is as follows:

m2#per#m#dep#pax ###################### 75 #################### 180 ##################### 45 #################### 300
25,0% 60,0% 15,0% 100,0%
Arrival(hall:
m2#per#m#dep#pax ###################### 53 #################### 126 ##################### 32 #################### 210 70%
25,0% 60,0% 15,0% 100,0%
Check7in(hall:
m2#per#m#dep#pax ###################### 23 ###################### 54 ##################### 14 ##################### 90 30%
25,0% 60,0% 15,0% 100,0%

December 2017
The current NBO landside areas measure:

Curent'NBO'LANDSIDE'm2: Retail F&B Services Total
m2#total ################60 ##############320 ##############120 ##############500
12,0% 64,0% 24,0% 100,0%
Arrival'hall'(incl'outside):
m2#total ################60 ##############320 ##############110 ##############490 98%
12,2% 65,3% 22,4% 100,0%
CheckDin'hall:
m2#total ##############, ##############, ################10 ################10 2%
0,0% 0,0% 100,0% 100,0%

We will now look at NBO performance against the benchmark, and how it will meet the future
growth (2 scenarios of 3.0% and 6.0% and two target years of 2020 and 2025).
We simplify things and take out the arrival hall/check-‐in hall split, because:
• At NBO arrival and check-‐in halls are on the same level;
• NBO has hardly any space in their departure areas.

Table 10 Area performance against Landside benchmark: current situation

m2#per#m#dep#pax ################75 ##############180 ################45 ##############300
25,0% 60,0% 15,0% 100,0%
Nairobi(Landside(m2:
current (((((((((((((((( 60 (((((((((((((( 320 (((((((((((((( 120 (((((((((((((( 500
allocation 12,0% 64,0% 24,0% 100,0%
dep$pax
current(m2(per(m(dep(pax ################ 17 ################ 90 ################ 34 ############## 141 #####3.550.000
current#m2#over/under#benchmark ############### .58 ############### .90 ############### .11 ############# .159
% .77% .50% .25% .53%

Conclusion:
• NBO seriously underperforms in both Retail (-‐77%) and F&B (-‐50%) departments.
• The allocation of space over Retail (12% vs the benchmark of 25%) and F&B (64% vs the
benchmark of 60%) is however fine, although Retail could increase a bit (notably with typical
landside retail such as a convenience store, a pharmacy and a news & books store).

December 2017
Future growth

Table 11 Area performance against Landside benchmark: 3.0% growth
Modest 3.0% LANDSIDE(benchmark: Retail F&B Services Total

growth m2#per#m#dep#pax ################75 ##############180 ################45 ##############300
25,0% 60,0% 15,0% 100,0%
req$in$2020$at$3.0%$growth: ############## 300 ############## 719 ############## 180 ############1.199 &&&&&3.995.556
current&m2&over/under&benchmark ############# )240 ############# )399 ############### )60 ############# )699

% )80% )56% )33% )58%

req$in$2025$at$3.0%$growth: ############## 347 ############## 834 ############## 208 ############1.390 &&&&&4.631.945
current&m2&over/under&benchmark ############# )287 ############# )514 ############### )88 ############# )890
% )83% )62% )42% )64%

Conclusion: inevitably, when growing at a modest 3.0%, NBO further aggravates its lack of space in
both Retail (-‐80% and -‐83%) and F&B (-‐56% and -‐62%) departments in 2020 and 2025 respectively.

Table 12 Area performance against Landside benchmark: 6.0 % growth
Aggressive LANDSIDE(benchmark: Retail F&B Services Total

6.0% growth m2#per#m#dep#pax ################75 ##############180 ################45 ##############300
25,0% 60,0% 15,0% 100,0%
req$in$2020$at$6.0%$growth: ############## 336 ############## 807 ############## 202 ############1.345 (((((4.481.793
current(m2(over/under(benchmark ############# ,276 ############# ,487 ############### ,82 ############# ,845
% ,82% ,60% ,41% ,63%
req$in$2025$at$6.0%$growth: ############## 450 ############1.080 ############## 270 ############1.799 (((((5.997.650

current(m2(over/under(benchmark ############# ,390 ############# ,760 ############# ,150 ########## ,1.299
% ,87% ,70% ,56% ,72%

Conclusion: inevitably, when growing at an aggressive 6.0%, the situation gets even worse. NBO

2.6 Category split: Airside Retail

In this paragraph we look at the spread of the shopping product categories at NBO over ‘consumer
buying categories’:
• Shopping (predetermined)
• Impulse
• Profile (local products i.e. ‘sense of place’, uniqueness)

The benchmark for that in Airside Retail in an international zone is:
December 2017
Figure 8 Category split: Airside Retail benchmark
6  Souvenirs)
6  Local)products)
5%) Proﬁle'
(uniqueness))
6  Fashion)
6  Jewelry)
6  Chocolate)
Impulse'
6  Leather/Travel)
30%)

6  Toys) 6  Liquor,)Tobacco)
2 )Perfumes)&)cosme7cs)
6  Electronics)
Shopping'' 6  Books/Magazines)
65%)
(predetermined)' 6  Drugstore)(convenience))

The current Airside Retail at NBO, can be divided over the categories as follows:

Table 13 Category split: Airside Retail at NBO
Shopping Area,(m2) Total % Benchmark Over/under

Duty%free)excl.)chocolates/sweets )))))))))461
Electronics )))))))))))15
Pharmacy )))))))))))20
News)and)books )))))))))))35 ,,,,,,531 63% 65% %2%
Impulse
Fashion)&)accessories )))))))))100
Chocolates/sweets )))))))))))80
Toys )))))))))))30 ,,,,,,210 25% 30% %5%
Souvenirs
Souvenirs)and)local)products )))))))))105 ,,,,,,105 12% 5% 7%

Total ,,,,,,846 100% 100%

Conclusions:
• Obviously this benchmark is not rocket science, but as an industry average it is the reflection
of a well-‐thought out, well-‐balanced Retail line-‐up.
• We have made our own estimates as to the allocation of the sqm in all the stores.
• NBO performs very well in line with the benchmark.
• The Souvenir category with 12% may seem rather large, but bear in mind that:
o Locally handcrafted items are very popular
o The industry average contains very large airports where the souvenir category simply
can’t be that big.

December 2017
2.7 Category split: Airside F&B

In this paragraph we look at the spread of the Airside F&B offer at NBO over the time that
passengers take to stay (their dwell-‐time). They are the following categories:


The benchmark for Airside F&B is:

Figure 9 Category split: Airside F&B benchmark
3%Full%service%restaurants%
>"40"mins"
10%%
*  Foodcourts%
75%% *  Fast%food%
10*40"mins"
*  Bars%
*  Grab%&%Go%
*  Counters%
10"mins"
15%%

The current Airside F&B at NBO can be divided over the categories as follows:

Table 14 Category split: Airside F&B at NBO
Category Area*(m2) Total % Benchmark Over/under

10*minutes ###########50 ********50 8% 15% &7%

10B40*minutes #########476 ******476 76% 75% 1%

>*40*minutes #########100 ******100 16% 10% 6%

Total ******626 100% 100%

Note:
Distinctions between ‘grab and go’ (10 mins) and ‘sitting down’ (10-‐40 mins) can be arbitrary. Obviously, there are elements of ‘grab
& go’ in the 10-‐40 mons fast food category. We have made our own assumptions regarding the categories and not checked these with
KAA.
December 2017
Conclusions:
• Distinctions between the 10 and the 10-‐40 mins categories can be arbitrary (see the note
beneath the table).
• NBO performs well in line with the benchmark.
• Street food cars and kiosks would fall under the category 10-‐40 mins.

2.8 Benchmarking other non-aviation business

With regards to benchmarking NBO’s other non-‐aviation business, we will focus on:

• Car parking
• Car rental
• Advertising.

2.8.1 Car parking

NBO collected KES 161m (EUR 1.3m) in parking revenues in 2016/2017. This is KES 45 (EUR 0.37) per
departing passenger.

World regional comparison: per car parking space, per day

Airports Council International (ACI) has produced research on car parking revenues in their ACI
Economics Report 2014, from which we quote the following:

Car parking is the second-‐largest source of non-‐aeronautical revenues after rental and real estate
revenue, representing one fifth of non-‐aeronautical revenues. […] There is significant variation in
the infrastructure designated for car parking across regions. In North America, most airport users
commute to airports using their own automobiles, but in other parts of the world, passengers are
typically dropped off at terminal buildings or use public transit as the preferred mode of transport
to and from airports. As a result, it is not surprising that a key revenue generator in North America is
car parking and related concessions. Boasting an average of over 10.000 car parking places per
airport, North American airports handle an average of four passengers per car parking space and
generate daily revenue of USD 12,16 per space. The Asia-‐Pacific region is also a leading revenue
generator at USD 9,04 per car parking space. North America has a greater supply of such spaces, so
airports in North America average half of Asia-‐Pacific’s passengers per car parking space.

December 2017
Figure 10 Revenue per car parking space
Revenue per car parking space (2013, USD per day)

14 12,16
12 10,06
10 9,04 8,86
7,75
8 6,05
6
3,79
4 Revenue per car parking
space (2013, USD per day)
2
0

How does NBO perform against the European average of USD 8.86 (EUR 6.73 at average 2013
exchange rate) per parking space?

Total&car&parking&revenue&NBO&in&2016: €&&&&&&&&1.300.000
Total&car&parking&spaces&at&NBO&in&2016: &&&&&&&&&&&&&&&&&2.800
Revenue&per&parking&space&per&day: €&&&&&&&&&&&&&&&&&1,27

Conclusion:
• This is not surprise at all as NBO is a city airport, pretty close to Nairobi centre and therefore
has a much lower share of parking spaces than larger American or European airports further
away from the city centre. Parking is well-‐used though.
• Nevertheless, NBO performs belows the African average of USD 3.70 (EUR 2.81 at average
2013 exchange rate).
• These are 2013 numbers, and we are sure that in the past four years the revenue numbers
have increased.

World regional comparison: as percentage of total non-‐aviation revenue

The same ACI Economics Report 2014 says that Europen airports on average generate 15,1% of their
total non-‐aviation revenue from car parking. How does NBO perform against that European
average?

Total&car&parking&revenue&NBO&in&2016: €&&&&&&&&1.300.000
Total&non<aviation&revenue&NBO&in&2016: &&&&&&&&22.000.000
Percentage&of&car&parking: 5,9%

Conclusion:
• NBO performs well below the average of 15,1%.
December 2017
• However, NBO definition of ‘non-‐aviation business’ includes rental income from hangars,
MRO, cargo, equipment, aircraft fuel concessions and ground/passenger handling; which we
consider ‘aviation’ income. Without this, NBO’s car parking would have been higher .

World regional comparison: airport income per departing passenger

Another study, the commercially published Airport Commercial Revenue Study by SAP/The Moodie
Davitt Report (115 particpating airports), focuses on airport income per departing passenger.
In the case of outsourced car parking, this is the fee paid by the parking operator to the airport. The
third party parking operator normally carries all the operational variable costs and sometimes (if it
has developed parking infrastructure itself) also the depreciation/amortisation.
In the case of car parking operated by the airport itself, this is usually the operating profit (EBITDA)
which airports generate from parking revenue after deduction of operational variable costs, but
before depreciation/amortisation.

We are able to quote the 2010 edition which shows the following figure:

Figure 11 Car parking income per departing passenger

Conclusion:
• We have no information on airport income from the parking activity at NBO, only the
revenues.
December 2017
• We therefore cannot judge whether NBO performs in line with any of the regional, or world
airport average.
• It would be interesting to do this exercise for NBO.

Revenue per departing passenger (individual airport comparison): not available

We do not have access to studies on car parking revenue (i.e. gross sales) per departing passenger
Developing such a dedicated study falls outside the scope of this performance assessment.
For JKIA Airport, it would be interesting to benchmark its car parking performance against
comparable size African airports.

2.8.2 Car rental

NBO generated unknown car rental revenues in 2016.

World regional comparison: car rental airport income per departing passenger
The same ACRS Study as cited above (115 particpating airports), focuses on car rental income per
These are normally the fees (per car rental transaction) plus the fixed rent (per m2 for the car rental
counter and all parking and service areas), as paid by the car rental concessionaire to the airport.

The 2010 edition of ACRS13 shows the following figure (next page):

We have no more recent study at our disposal.

13
December 2017
Figure 12 Car rental income per departing passenger

Conclusion:
• Once known, it would be interesting to compare NBO’s performance against these
benchmarks, and in particular search for African examples (such ABB and ACSA airports).

2.8.3 Advertising

KAA manages the advertising itself. KES 239m (EUR 1,95m) was collected in revenues in 2016/2017,
which amounts to about KES 67 (EUR 0,55) per departing passenger.

World regional comparison: advertising income per departing passenger

The same ACRS Study as cited above (115 particpating airports), focuses on advertising income per
In the case of outsourced advertising, this is the fee paid by the advertising concessionaire to the
airport. The concessionaire is an intermediate to brands, but it also deals with media agencies as
another intermediate. The advertising concessionaire usually brings in infrastructure (panels,
screens) and calculates that into its percentage fee offer. The company usually also carries staff
operating and maintenance cost but not utility (electricity, IT) cost.
December 2017
In the case of advertising operated by the airport itself, such as at NBO, the figure of advertising
income is usually the total revenues received before deduction of any costs. We assume this is the
case at NBO too.

The 2010 edition of ACRS shows the following figure:

Figure 13 Advertising income per departing passenger

Conclusion:
• The global average of USD 0,77 for airports < 10m pax is EUR 0,57 given the average
USD/EUR exchange rate of 2010.
• NBO with EUR 0,55 in 2016 performs exactly on this average, which is remarkable.

December 2017
Step 3: Recommendations
December 2017
3. Step 3: Recommendations

In this chapter, we have collected our recommendations based on our visual observations, analysis,
benchmarks and experiences at other airports in the world. We were also asked a number of
specific questions by the management of KAA.

We will follow the same business segment order as chapter 1.

3.1 Airside Retail
• Most parts of Terminal 1 feature line stores which are closed shells full of various merchandise.
At some places stores are opposite each other, but that is more the exception than the rule, and
most of the times impossible to realise because of the narrow width of the concourse.

• Still, we think there are opportunities to create some more ‘pinball effect’ by rearranging some
of the existing space. This is addressed in the next paragraph.

• We would like to remark that restricting of products allowed to be sold by the concessionaires
will deliver significant improvement to KAA. Explicitly and exhaustively naming the products is
common practice among airports, so in this respect NBO has a long way to go.

• We also recommend to group the duty-‐free concessions into one package, which will give
probably the biggest boost to all non-‐aviation income. A requirement is obviously that all
contracts expire at the same time. For this, some contracts could be temporarily extended until
this moment appears.

• Closed gate rooms: we noticed the many gate rooms which have glass walls and wondered if
this is still necessary from an operational/security point of view. If not, we recommend many
gate rooms to be opened to win valuable airside space. This is addressed in the next paragraph.

• Even though KAA has secured a contract with Dufry Kenya against a MAG of USD 3.5m or 20% of
gross revenue, and has made this percentage the target for every duty-‐free retailer, we think
that 20% is still below the global average of percentages paid for duty-‐free concessions. These
can go up to 40-‐45% (e.g. at ICN, TLV or SIN), which of course is not representative for African
circumstances. Still, we would advise to hold an open tender next time that all the duty-‐free
contracts expire (for this, some contracts could be temporarily extended until this moment
appears). A knock-‐out target of 25% could be set with bids invited to surpass that.

3.1.1 Space reconfigurations
During our fact-‐finding visit, we discovered potential improvements in space configuration in various
parts of Terminal 1. They follow below.

December 2017
Convert a gate room next to the Dufry store

We noticed that the pictured gate to the
left of the Dufry store is large and
separated with windows. We wondered
whether the windows could be removed
to make place for an F&B facility (cafee,
sandwich, fast food etc) in part of the
gate, next to the Dufry store. The F&B
unit could be integrated with the gate,
as is nowadays very common in open
gate-‐airports.

Conversion of part of this gate into F&B

adjacent to the Dufry store.

The advantage of having an F&B unit there would be to ‘stop’ the passengers and give them a place
to stay, while still being exposed to the Dufry store. This will surely increase retail sales. We consider
this a QUICK WIN.

Convert more space on the other side of the Dufry store
At the other end of the Dufry store, the Terminal 1A main concourse opens up. Quite quickly
passengers see the escalators to the food court appear. But immediately after the exit from the
December 2017
Dufry store, there is nothing to ‘stop the passengers’. As discussed in paragraph 1.5, any food court
on a mezzanine at an airport is bound to suffer from the fact that 50% of the passengers are simply
not willing to go upstairs for fear of losing ‘visual control’ over their departure gate.

We see an opportunity to create some F&B at the window area where currently a KQ transfer desk
and some telecom counters are located:

Conversion of this area into F&B
adjacent to the Dufry store.

The advantage of having an F&B unit there would be to ‘stop’ the passengers and give them a place
to stay, while still being exposed to the Dufry store. This will surely increase retail sales. We consider
this a QUICK WIN.

Create a market square in Terminal 1C
In Terminal 1C, there is an area without gate rooms which
would lend itself, in our opinion, to the development of a
market square of some sorts.

The area (indicated on the plan at right and pictured on the
next page) could be a magnet for passengers passing
through the corridor. There is hardly any F&B in the
neighbourhood; the next place is a generic restaurant
further down towards Terminal 1D.

The area could be developed with 1-‐2 retail stores and 2 F&B
units. The apron view from the windows is ideal.

Conversion of this area into a m arket
square with retail and F&B.
December 2017
The current configuration of the potential m arket square at 1C. The telecom counters can easily be placed elsewhere.
The smoking lounge will be conveniently located next to the new F&B units.

3.1.2 Review of the ADPi/APEC plans for the commercial
refurbishment of Terminals 1B-C-D
We were asked our opinion about the schemes proposed by ADPi/APEC in their document of 27
June 2017 14.

We are happy to provide our comments, as follows:

General concept
We like the general concept of rebuilding an arrivals and check-‐in facility in the center of the circle,
on the location where a structure was before the fire destroyed it in 2013. A central check-‐in and
arrival is just what NBO needs. It will free up space for other purposes and concentrate the
14
Commercial retail concept report, JKIA Refurbishment of Terminal 1B/1C/1D, by ADPi and APEC, 27 June 2017.
December 2017
passenger flows which is good for commercial and operational reasons. The central positioning of
the reclaim area creates the opportunity of an arrivals hall commercial programme which is now
non-‐existent. The check-‐in area on the first floor is logical from a passenger journey’s point of view
and will transform operational space (security in T1A) into commercial space in the airside
departures area.
We think this is is a very good plan.

Forecourt roads and kerbside
We have our reservations however looking at the access roads, forecourt and kerbside. This falls
outside the scope of this non-‐aviation business performance assessment, but with our experience
we can almost guarantee traffic clogging up in this design. The concept needs careful
reconsideration, in our view. Of we course we are able to help here.

Airside departures commercial schemes
The ADPi/APEC plan is a serious improvement on the current commercial programme. It creates five
different market squares in Terminals 1B-‐C-‐D which has currently none. This will build up critical
mass of passengers, keep them interested to spend, reduces their travel stress and makes their
journey altogether more pleasant. It will for sure signify a major boost to commercial revenues for
KAA.

However, we do see improvements to the plan. They are as listed below. We refer to the five
market squares numbered 1 to 5 from left to right (see drawing below):

2

1
3

4

5
December 2017

Cluster top left: with three F&B units and a small retail unit in the middle, we think this is
unbalanced. Two retail stores and two F&B would be better. Furthermore, the central 1
oval-‐shaped space should not be retail but F&B, as otherwise it takes away sight from
one end to the other.

Central market square opposite the security: in general, this is a very good design. It
welcomes the traveller right after security and addresses their most captive mood. There 2
are shops and restaurants on both sides. The storefronts are shaped in a nicely curving
line which is the modern way. We also applaud that the three departure gates immediately
behind the market square are hidden from view. Direct view on these gates would definitely
increase the passenger stress levels. If there is something to improve, it is the disbalance between
Retail and F&B. Only one F&B facility won’t keep the passengers in the area as they will look
elsewhere to sit down. Furthermore, this 230 sqm F&B unit is right opposite the entrance. This most
strategic location should be reserved for the money-‐maker of duty-‐free and/or big fashion brands.
We would split the F&B unit in two locations left and right.

Cluster top right: here, the intention is clearly to establish a food court. Which in itself is
a good idea, but in our opinion this should be embedded within a retail environment, 3
because passengers will then consider a second visit to the stores because they are in
constant view. Seeing only F&B in this cluster therefore leads us to the recommendation of mixing
this with Retail stores.

Cluster right: what is true for the previous cluster is true for this one, but then the other
way around. We see only Retail units. This should be mixed with F&B in order to create a 4
genuine market place where passengers want to settle down and enjoy their moments
before boarding.

Cluster bottom right: by now, our comments repeat themselves: this cluster is only
occupied by F&B units, with the exception of a central oval-‐shaped unit, which however 5
should not be Retail but F&B because it would otherwise obstruct the passenger’s view.
So, we recommend inserting some Retail units here which match the atmosphere and sense of place
of the restaurants in the cluster.

3.1.3 Dufry walkthrough store
KAA has done well to introduce a walkthrough duty-‐free store in Terminal 1A together with Dufry
Kenya.

Our experience is that throughout the world, converting linear duty-‐free stores into walkthrough
stores increases sales by about 25% on average. We are confident that KAA will experience the
same increase compared to the previous situation.

Part of this boost is the general increase of space.
The other part of the boost is the walkthrough-‐system itself:
December 2017
• This allows the space to be more productive because passengers meander more easily
through the shelves and product categories.
• It captures the passengers right after they exit the security area, which means 100%
exposure and no other distractions.
• The store embraces the customer from all sides, which causes a better ‘pinball’ effect of
passengers bouncing between one category to the next.

The great challenge with duty-‐free walkthrough stores is that they are usually right after security
and some passengers first want to visually check where their gate is. If they are too anxious or the
gate is too far away, they may not come back to the store.

At NBO, the duty-‐free walkthrough store is out of sight once passengers have entered either end of
the Terminal 1A concourse, so they are not exposed any more.

So the challenge for NBO and Dufry will be how to:
• Bring passengers immediately into their comfort zone right after security è our tips for the
‘decompression zone’ are: pictures on screens (moving, as advertising medium); and the
fence to keep carts from view (flowing over in the new DF area) can be given a nice Kenyan
picture and/or connected picture to the duty-‐free.
• Seduce them to have a look around è hostesses can gently point out promotions and hand
out vouchers, while reassuring anxious first-‐time outgoing tourists. (This has been deployed
by airports such as Budapest and Amsterdam Schiphol to great success, although not in the
walkthrough duty-‐free areas but in the centre of the airside departures lounge – see pictures
below).

• Inform them loud and clear about flights and gates: through plenty of FIDS and the same
hostesses.
• Convince them to come back from the concourse for a second visit: by tapping into their
guilt feeling (fear of missing out) that there are promotions and exclusives only in this store;
also by handing out vouchers.
• Create more exposure after passengers have walked through: if the current gate room in th
epier/finger, and the space on the right of the store at the current Kenya Airways transfer
desk, are converted into F&B untis, more pax will stay and eat there and remain in view and
in toch with the walkthrough duty-‐free store.
December 2017
We are convinced that KAA/Dufry will realise a further spending boost after these ideas are
implemented and the circumstances optimised after children’s diseases have been cured and many
ideas have been tested.

3.1.4 Pop-up stores
A retail idea to consider for both Schengen and Non-‐Schengen areas is the pop-‐up store. This is a
trend which has definitely caught on in many cities. Old department store buildings are converted
into hip collections of pop-‐up stores and restaurants. Still functioning department stores liven up
their offer by offering young brands through pop-‐up stores with a quick turnaround. Office buildings
and public spaces such as railway and metro stations accommodate pop-‐up stores too.

This is a great opportunity for airports to be more dynamic and introduce fresh brands and ideas
more often. Airports may view it as logistically too complicated, but help is just around the corner.
The ‘AirBnb of pop-‐up stores’ wearepopups.com is a platform and network which connects
thousands of space owners with innovative brands in fashion, food & beverage, art, beauty,
education and community. Spaces offered are shop corners or shelves or entire retail units.
Forward-‐thinking airports could learn from this development, and it may be a great idea for Tallinn
Airport too.

3.2 Airside F&B
There is much to improve to the current airside F&B programme at NBO. We have already
addressed most improvements in the section on airside Retail:

• Convert a gate room next to the Dufry store – paragraph 3.1.1 (a QUICK WIN in our opinion)
• Convert more space on the other side of the Dufry store – paragraph 3.1.1 (also a QUICK
WIN)
• Create a market square in Terminal 1C – paragraph 3.1.1 (also a QUICK WIN).

In addition, we have two recommendations for the food court in Terminal 1A:

• As we explained before, half of the passengers simply don’t go upstairs to a mezzanine level
for fear of losing visual control over their destination and gate. We didn’t see any flight
December 2017
information display screens (FIDS) in the food court. This will make those going upstairs
insecure. So we strongly recommend to install a few FIDS in the area.
• Apart from a generic sign and a Hardee’s display coming out of the Dufry store, there is not
much attracting the passenger to explore the food court. Why not spend some marketing
funds together with the F&B operators to have someone standing downstairs near the
escalators to hand out vouchers in order to increase traffic to the food court?

Terminal 1D does not have any F&B at all. Depending on the traffic, we recommend to at least have
a mobile cart or food kiosk there. See the next section.
We also think that creating a more ’mobile food’ will be a very good idea.
Pop-‐up restaurants and Food trucks have entered the airport arena. Food Markets are a big hit in
many cities. To confirm and support, we have summarised these F&B trends in the captions below:
December 2017
Pop-‐up restaurants
A trend originating in city-‐centres: restaurants and chefs putting up tables, chairs and mobile kitchens
in a park, outside or inside a museum, in weird places. The chefs cook surprise menus and the
audience has picked it up from social media only the day before. A ‘guerrilla restaurant’ with a
‘whisper campaign’ and it seemingly has no p ermission which adds to the rebel feeling surrounding
the event.
This pop-‐up restaurant trend has evolved in p lanned and permitted forms everywhere. The digital
platform ‘wearepopup.com’ (‘Find Space. Meet Brands. Build Relationships.’), also called ‘the AirBnb
of pop-‐up stores’ h as a division handling pop-‐up restaurants.
At airports, it is quite difficult to organise a pop-‐up restaurant but Copenhagen Airport succeeded in
organising and publicising one: the Hallo Hello p roject in August 2014. Branded as ‘Social Dining’, its
mission was: be a conversation starter by serving a meal that makes p eople talk, hoping the
conversation will continue in the air. The project gained huge publicity for CPH’s F &B profile and the
airport estimated its media PR-‐value was DKK 4m (EUR 550.000).
Will this example be followed by other airports, such as TLL? Time will tell.
December 2017
Food trucks into the airport
Streets, parks, campuses, offices, events: food trucks are everywhere. They are not a disease, they’re very
hip, and they have created a huge demand. It is the experience which the customer is after, the truthful
ingredients, the meaningful preparation, the entire story…how much can you deliver in a few minutes
through the window of the food truck?
Retro-‐Volkswagen vans are extremely expensive and hard to come by.
The trend has caught on at airports. An example: Portland Airport in the US hosts a pod of food trucks
before security, offering kimchi q uesadillas from Koi Fusion and sandwiches from PBJ's Grilled. The airport
says that they hope people will come to the airport just to eat a snack and watch the p lanes.
Such an activity seems preposterous, but in the Golden Age of airplane travel, it was glamorous to go to
the airport for a fancy meal and a view of the planes taking off. Back then, of course, no one had to take
off their shoes or be subjected to a full-‐body scan. But it's still become possible to imagine a world where
the airport is once again a dining destination. For an organic meaningful experiential vegaburger from a
food truck, or for a McMeal with fries.

Below: food truck inside a delicatessen store at Rome FCO (Lagardère TR)

Kogi BBQ at LAX @ Stockholm Arlanda

December 2017
Food halls
Food halls have become very popular all around the world. No city centre in the developed world can do
without them.
Old factories and warehouses, tram depots, deserted parking garages and obsolete office towers are
converted into food halls. A food hall is something different that a market hall: a collection of little
restaurants, rather than market stalls where you buy your fruit and vegetables.
It has become a meeting place and as such gradually replaces clubs and discos. The food offer is varied
and a group of friends can all choose what they like to eat. It is a low-‐threshold concept. On the
operational side however, foodhalls must be very commercial and competitive in order to survive: all stall
owners are fighting for the same customers. On the bright side, capital investment is lower than in an
individual restaurant, and fixed costs, utilities and seating areas are shared
Evidently, food halls are popular at airports too. The old-‐fashioned food courts have always been there.
More sense-‐of-‐place food markets have been introduced.
Food hall in

Lisboa

3.3 Customer journey
A lot about the customer journey has already been said in this report, partly in Chapter 1. Paragraph
1.17 Customer journey touchpoints, and partly in our recommendations on Airside Retail and
Airside F&B in this chapter.

Here are a few other recommendations;

• Gate branding: in Chapter 1. Paragraph 1.17 Customer journey touchpoints, we promised to
present some pictures of what we think is a brilliant example of innovation in improving
customer journey and airport advertising: the gate branding at Tallinn Airport (2,2m pax in
2016), Estonia, one of our clients.

December 2017
Not only is its ambition to be “Europe’s cosiest airport”, it may well be underway to achieving it.
The airport is instantly welcoming you to Estonia, and making you feel at home on departure. Not
least because it is full of sense-‐of-‐place elements in the form of nicely branded departure gates,
quite special in today’s airport world.

December 2017
è could this be a interesting idea for JKIA Airport?

• Piano: at some airports we have seen a grand piano in the
concourse. We find this is another great idea. It may or may
not be heavily used but it works in railway stations and other
public places around and people love it. It makes sterile mass
transport halls personal. And so it may do at NBO.

• Chess table: this is another great customer journey
touchpoint. We saw this one standing at Tallinn Airport. And
people were playing when we came by.

• Wifi: we were unable to check whether KAA offers wifi free of
charge everywhere. We recommend that it does. Wifi is a
service which people expect to be smooth, working well and
free of charge. In that sense it is a so-‐called ‘nuisance value’
like parking: you only notice when it’s negative and charged
with a fee. Airport that still charge their passengers for wifi
experience this at their peril. Also, we recommend many
device charging points throughout the airside area.

3.4 Terminal concession management
Our impression is that KAA manages its terminal concessions reasonably actively and successfully. A
number of business instruments KAA deploys were discussed in our previous assessment in Chapter
1.

3.4.1.1 Contracts
We were specifically asked by KAA to look at the various existing contract forms for terminal
concessions around the world, and then see where NBO stands.

The four different models to operate terminal concessions have different risk/reward profiles and
vary with the maturity of the business, the time horizon of the partners, and the operational
influence of the airport on the business:

December 2017

Different operational models to operate terminal concessions.

KAA uses the traditional concession model for all its Retail and F&B business. We think this is a wise
choice.

KAA charges concessionaires mostly fixed rent per m2, and then in some cases a percentage fee of
gross sales and a MAG. Usually the fixed rent is a much smaller component than the percentage fee
in order to have airport and concessionaire focus on the same goal: increase customer sales.

è One could argue that the fixed rent for these retailers is already a very high burden and that it
lowers their incentive to increase sales because they have to pay the fixed rent anyhow. If they can
cover their fixed costs sooner, they will put more energy into aggressively growing sales because
they get a higher reward. Thereby aligning the retailer’s and airport’s interests better.

è KAA is already well underway to changing its rent/concession fee structure into something more
variable, with the new plans in place, some of which have already been implemented, notably the
Dufry contract.

3.4.1.2 Marketing Committee
KAA has an open and active relationship with its concessionaires. It has informal contact on a
regular basis and on a more formal basis, every quarter.

To cement the business partnership even further, we recommend considering the development a
Marketing Committee.

Such a Marketing Committee is a common institution at some of the larger airports in the world. It is
part of a list of Marketing and Promotion initiatives which generally comprise:

December 2017
Marketing & Promotions

§ Marketing communications plan
§ Targets
§ Customer behaviour
§ Internal organisation
§ Marketing Committee
§ Communication tools
§ Communication budget
§ Communication Calendar
Targets
Typical objectives and targets for Marketing and Promotions are:
Objective KPI Current Target

Improve price Price
image perception*
Increase footfall Visit rate**
Increase
promotion share of % promo sales
gross sales

In the three stages of the consumer buying process, the main responsibility of the airport is to
attract:
Turn passengers into Turn shoppers into Turn buyers into

shoppers buyers advocates
Attract Convert Retain

Considerati
Ignorance Awareness Need Trail Purchase Repurchase Loyalty Recommend
on
Main responsibility of the

airport

These are examples of communication tools to achieve the different objectives:

December 2017
Objective Communication tools
Improve price perception All price communication
Booklet
Terminal banner
Increase footfalls
Front store banner
Big discount cards
Store banners
Increase conversion in store
Small discount cards

The time when Retail communication should take place to be effective along the so-‐called
‘passenger stress curve’ is:
Retail Communication

There is also a difference between Terminal and in-‐store communication:

December 2017
Terminal versus In-store communication
5%
SPECIAL(OFFER(
(
20%(
OFF(
SPECIAL 20% 10%

OFFER
20%
OFF
TERMINAL IN-STORE

Returning to the Marketing Committee, its methods would be:

• The Marketing Committee consists of representatives of KAA and concessionaires
• The Marketing Committee is chaired by a senior manager of KAA
• Members must have decision taking authority
• The Marketing Committee decides on the fulfilment of the theme for promotions
• The Marketing Committee approves on promotions and material
• Final approval is by KAA
• The chairman of the Committee informs all other concessionaires.

…and the set-‐up of the Marketing Committee would involve the following:

• Who will be in the committee?
o 3 KAA representatives
o 5 concessionaire representatives
• Frequency of meetings
o Monthly
• Roles and responsibilities
o Developing and executing marketing plan
o Developing and executing communication plan
o Defining and controlling marketing budget
o Performing market research
o Analysing promotion performance

One of the decisions of the Marketing Committee at NBO could be the development of a Marketing
Fund, jointly financed by airport and concessionaires. It is in the interest of the airport to see its
December 2017
brand return on all messages and materials. It is in the interest of the concessionaires to be
associated with the airport as part of its positive experience.
For instance, Amsterdam Schiphol Airport has a Marketing Fund which works very well and, among
others finances its SeeBuyFly packaging, marketing and promotion materials. Airport and
concessionaires each put about 0,5% of their revenues into this fund.

3.5 Car parking
Are there services around car parking which can be considered by KAA within its parking garage?

These are commercial services existing in the airport world today:
• Car cleaning in ‘tunnel’ systems
• Car fuelling stations
• Tyre change services (including but not limited to balancing) and tyre bank/depot
management
• Mini-‐repairs and oil change services
• Valet parking (including but not limited to key storage, valet parking management
systems, valet parking pay stations)
• Mobile and web applications (with services including but not limited to pre-‐booking,
payment, ‘where is my car?’, valet booking and payment, car washing, tyre services etc.).

Some of these may be too large for KAA to handle or requiring too much space; and some ideas may
already exist.
Looking at the car parking business at some very large airports such as London Heathrow, Paris
Charles de Gaulle, Frankfurt and Amsterdam Schiphol, for the benefit of KAA management we
would like to quote from a public study on London Heathrow’s car parking of April 2017 15:
15
Heathrow Airport – Review of Commercial Revenues, Final Report April 2017 by the UK Civil Aviation Authority.
Prepared by Steer Davies Gleave.
December 2017
3.5.1.1 Best practice from other airports

• UK airports are seen as leaders in the global airport parking market.
• Airport parking is a mature market in the UK and airports have well developed car park products
with customer centric, easy to use, pre booking websites and are leaders in yield management
and pricing optimisation techniques. Heathrow Airport Limited (HAL) has developed a wide
range of products and, with its yield management supplier, Ideas, has now created a responsive
yield management system to effectively manage the Heathrow parking portfolio.
• From a product perspective, Amsterdam Schiphol is the key comparable airport (the parking
operation is owned and operated by Schiphol) with a number of well-‐developed parking
products and an effective pre-‐booking system introduced in 2004, delivering over 70% pre-‐
booked transactions at peak times. Pre-‐booking was principally introduced to tackle the issues of
falling penetration and to address growing off-‐airport competition (over 25 competitors), but
like Heathrow now provides Schiphol with better customer profiling from customer data,
growing the overall e-‐commerce opportunity, as well as increasing parking revenues from
upselling and targeted promotions.
• Schiphol provides quality parking products, for example its Excellence business product offers a
waiting area with WiFi and other facilities, wider bays, bay sensors and a number of payment
options such as credit card payment on entry and Automatic Number Plate Recognition (ANPR)
for pre booking. Valet parking offers additional reward points when booking ancillary services
such as car wash, tyre change, and car service.
• Other European airports offer the same core range of products but with some new products
such as “Ladies Parking” (women only) at Frankfurt airport with reserved rows colour coded in
pink to aid wayfinding and wider bays which sparked a sexism row when introduced.
• Although there are similar levels of off-‐airport competition at European airports, the UK airports
attempt to manage and license off-‐site operators to try and mitigate their competitive impact.
HAL licenses bussed operators and provides discounts in the short stay car parks for off airport
meet and greet competitors.
• With the implementation of HAL's budget priced Good To Go product, comparable with
Manchester Airports Group (MAG)'s Jet Parks portfolio of products, HAL is now directly
competing in the market place for the customer who traditionally at Heathrow would use
private hire or off airport parking. HAL is monitoring volumes and any dilution impacts with this
product on its other pre book business. By adopting this approach HAL will ensure parking yields
are optimised.
• Although pre booking is becoming more common place in Europe, peer airports such as Paris
• CDG and Orly have limited reserved parking but in the main provide discounts by subscription or
loyalty programs. This often results in a higher yield per space with the majority of transactions
‘roll up’.
• The global growth of private hire (in particular Uber and Lyft etc.) is a challenge for all airports.
In the US, where provision of free cell phone lots (waiting areas provided by the Airport for
vehicles pre accessing the forecourt to drop off customers) is the norm, airport operators are
now trying to respond to falling parking revenues by actively marketing their parking services
and adopting a pre booking strategy.
• In the UK and in particular at Heathrow where there has always been a high level of competition
from taxis and private hire. HAL's response has been to create a designated car park (located on
the northern perimeter road above the CTA tunnel) with a charging structure to move private
hire from waiting on adjacent residential roads. This has been in operation since June 2016 and
has been well received by local residents. In tandem, tighter enforcement of forecourts and
December 2017
airport access roads will help to manage the issue operationally. Although it is too early to assess
the impact on HAL's short stay revenues in any detail, early indications show that there is a
greater proportion of transactions in the 30 minute time band in the short stay car parks. This
increase in volume has delivered an increase in revenue but eroded Average Transaction Value.

3.6 Taxis
KAA asked us to share some information on how airports cope with the fast-‐growing market of
Transportation Network Companies (TNC’s) such as Uber, Lyft etc.

We are happy to do that. Below, we share some insights by our colleagues from Intervistas
Consulting Group in a presentation delivered recently 16:

16
TNC’s: impacts on airports. Presentation by Peter Mandle of Intervistas at the AAAE Parking and landside
management workshop in September 2016 in Charlotte, USA.
December 2017

December 2017

December 2017
3.7 Car rental

NBO doesn’t have much car rental business. Car rental revenues are not administered separately by
KAA, so we cannot assess its performance.

As far as we could see, only Avis is present as concessionaire.

Still, we would like to share some recommendations, should KAA consider to expand its car rental
business. The central question confronting airports is usually: should we limit the number of
operators, or allow the market freely? We were asked by KAA whether this is a good strategy.

Well, we think that limitation of the number of car rental operators is a good strategy, because it:

• Provides only large, trusted brands to KAA’s customers
• Prevents local, shady, ‘disruptive’ entrepreneurs
• Blocks off-‐airport parked and serviced rental cars
• Creates scarcity of rental car parking, service and counter rental space, and through it
creates competition.

Another potential question asked by KAA could be: “what would be the most efficient way for
pricing car rentals?”

Mostly, airports generates car rental revenue in three ways:
• Rent of a car rental office in the terminal;
• Rent of parking spaces;
• Charging a fee on the transactions.

A lot of airports charge a tariff per transaction, the height of which is surrounded with much
secrecy. We are informed that it may be anything between EUR 7,50 and EUR 20,00. Of course this
is all subject to the typical revenue per car rental depending on the city, country, typical driving
trips. This is a well-‐known system and working well for most airports.

We also understand from market insiders that some airports charge a percentage fee of gross sales.
Unfortunately we cannot back that up with examples or details of fee percentages. The challenge
with this system is obviously that the car rental company’s cash register system must be connected
or be part of the airport’s point-‐of-‐sales (POS) system such as is common with the airport’s retailers
and F&B operators. The benefit of this system is that the car rental company always pays a ‘fair
share’ of its business to the airport. When a lot of short rentals occur with low revenues, the car
rental company may feel it is punished if the fixed fee remains the same.

Finally, some research on car rental developments yields the following for the benefit of KAA
commercial management:

• Car rental companies have been innovating over the last few years and utilising technology
to provide more self-‐service options for customers, reducing manned facilities and thereby
cutting operating costs.
• Airports generally are supportive of such developments: for example, by providing car rental
companies prime spaces in the short stay car parks. At a lot of large airports however, the
December 2017
opportunity to materially improve the airport’s car rental product offering and revenue can
only be delivered by providing a consolidated car rental centre.
• There are many examples of this in the US and Europe, for example Nice Airport’s
Consolidated Car Rental Centre has over 2.000 spaces housed in a dedicated MSCP and
generates 80% of all car rental activity in the immediate region and 10% of the French total.
London Heathrow’s car rental operators in contrast have in total just over 1.000 spaces split
across five remote locations with unimpressive wayfinding for the customer.

3.8 Advertising
KAA manages the advertising itself, as observed in Chapter 1. KES 239m (EUR 1,95m) was collected
in revenues in 2016/2017, which amounts to about KES 67 (EUR 0,55) per departing passenger.

This number is healthy and at the high side of industry average.

The range of advertising media is diverse and it seems than many opportunities are addressed.

We discussed the pros and cons of managing your own advertising in Chapter 1 Assessment, and
would like to repeat our recommendation to KAA to keep doing this, in general, to retain control.

Having said this, many airports are outsourcing the digital advertising on some of their in-‐house TV
screens. The question is: should airports outsource the digital side of their advertising space?

We would like to respond to that. These are actually two different questions:

1. What is the advantage of digitising the airport’s advertising media?
Ø Digitisation of the media in the airport results in a new and greater awareness among the
advertisers. Potentially, digitisation of the airport media offers large opportunities in relation
to the advertisers and their communication. Not least in relation to a much sharper targeting
of messages and the creative design of the material for the benefit of an increased effect of
the communication in the airport. In the long term, this ought to result in increased
advertising activity at the airport.
Ø Digitalisation of the media is breaking down the traditional silos. Every time an offline
medium becomes digitised many new opportunities arise for advertisers. The flexibility that
results from digitisation gives the possibility to make messages within the media channel
adaptive and therefore more relevant to the consumer.
Ø With advertising digitised, passengers will see more vivid images and more relevant
advertising messages. The advertisers will have the opportunity to accurately target their
advertising efforts to the various travellers. This because the advertisements can be targeted
in precisely the time period when the relevant target group of passengers passes through an
area in the airport. The individual passenger then experiences more relevance and less
advertising static on his or her way through the airport.
Ø Also, software and facial recognition technology can document the effect of how many
people in the target audience (‘eyeballs’) are reached, an important feature for the media
bureaus' interest in campaigns. With digitalisation, an airport can also become more
December 2017
interesting for B2C customers, because they can purchase shorter, more tactical campaigns
with shorter production times and lower production costs than with analogue productions.

2. Should KAA consider to outsource this digital advertising?

Here is an overview of the considerations:
Ø Control of screens for operational purposes: KAA should retain full control of its digital
screens to display flight information and security/emergency messages.
Ø Control of screens for campaign purposes: KAA should be able to quickly introduce a
campaign or brand associated with another activity at the airport, outside the influence of
any digital advertising partner.
Ø Revenue share: does the advertising partner propose a revenue share model? What are the
scenarios? Is there a minimum guarantee? What is the base scenario (airport does not
outsource) to compare with?
Ø Hardware investment: this may well become part of a cost/revenue share model between
airport and advertising partner. Does it have enough procurement power? What if the
airport is better off investing itself? Is there an upfront payment by the airport to the
advertiser for equipment?
Ø Software: is the advertising partner able to combine different types of media messages
(including airport operational) in its software/servers? Are there licensing costs?
Ø Operations: who solves IT and maintenance problems, the partner or the airport? And is the
server at a remote location or is it located at the airport? What are the service costs?
Ø International brands: does the advertising partner have brand clients who would not be
interested in an airport the size and location of KAA, if KAA approached them directly? I.e.
could KAA piggy-‐back on these clients?
Ø Other airports: does the advertising partner have other airport clients or city clients for
indoor/outdoor media?
Ø Control of advertising time: does the advertising partner want a guaranteed percentage of
time uniquely dedicated to its own campaigns without influence by KAA?

These should all be carefully investigated by KAA in order to answer its own question.

A series of innovative advertising partners are in the market, each with its own distinctive strategy;
to name a few:

Ø JC Decaux: the market leader; mostly insisting on a mix of digital and analogue advertising
media for its airport partners where it seeks to have 100% control and which must be above
a certain threshold size (larger than TLL we believe).
Ø Clear Channel: market leader in the USA, and the no. 2 in airport advertising. Strategy with
digital: unknown.
Ø Ströer: another very large company with over EUR 1bn in sales, strong in German-‐speaking
countries. Not with a partiular focus on airports.
Ø Airmagine (Egmont Group/Dansk Reklame Film): Danish company which surprised the
airport world by clinching the media contract at Copenhagen Airport with a 100% digital
media strategy. Strong in software solutions to integrate all airport’s messages and to
measure customer segments. Aggressively targeting airports at the moment.

December 2017

End of Report.
December 2017
Index of Tables and Figures

Table 1 Total KAA revenues 18
Figure 1 Non-‐aviation business income (numbers) 19
Figure 2 Non-‐aviation business income (percentages) 19
Table 2 Airside Retail income 25
Table 3 Airside F&B units per dwell-‐time category 29
Table 4 Airside F&B income 29
Figure 3 Airside / Landside concession comparison: airport income 33
Table 5 Overview of airports 44
Figure 4 Comparative Retail sales per DP 45
Figure 5 Comparative Airside and Landside F&B sales per DP 46
Figure 6 Airside F&B sales per IDP: world regions 47
Table 6 Retail and F&B income per DP 48
Figure 7 Airport income from Retail and F&B per DP 48
Table 7 Area performance against INT airside benchmark 49
Table 8 Area performance against INT airside benchmark: 3.0% growth 50
Table 9 Area performance against INT airside benchmark: 6.0 % growth 50
Table 10 Area performance against Landside benchmark: current situation 52
Table 11 Area performance against Landside benchmark: 3.0% growth 53
Table 12 Area performance against Landside benchmark: 6.0 % growth 53
Figure 8 Category split: Airside Retail benchmark 54
Table 13 Category split: Airside Retail at NBO 54
Figure 9 Category split: Airside F&B benchmark 55
Table 14 Category split: Airside F&B at NBO 55
Figure 10 Revenue per car parking space 57
December 2017
Figure 11 Car parking income per departing passenger 58
Figure 12 Car rental income per departing passenger 60
Figure 13 Advertising income per departing passenger 61

December 2017
Sources
We used the following sources in this study:

• ACI Airport Exchange, Istanbul 8-‐10 Dec 2015: own and other presentations
• ACI Airport Exchange, Paris 4-‐5 Nov 2015: own and other presentations
• ACI Europe Commercial & Retail conference: various events, own and other presentations
• ACI Europe Commercial Forum: various events, own and other presentations, data exchanges
• ACI Europe General Assembly, Athens 20-‐22 June 2016: own and other presentations
• ACI Europe General Assembly, Prague 24-‐26 June 2015: presentations
• ACI Europe RACE Regional Conference and Exhibition: various events, own and other and
presentations
• ACI Finance & Economics conference: various events, own and other presentations
• ACI North America annual concession benchmarking survey for Retail and F&B, edition 2015,
published by Airports Council International
• Airport Commercial Revenue Study, published by The Moodie Davitt Report and S-‐A-‐P, edition
2011
2014
2015
• Airport Economics report 2014, published by Airports Council International
• AMS Amsterdam Schiphol Airport: corporate information and data gathered by MSC
• ARN Airport Revenue News: news, corporate info, event coverage, various reports
• CDG Paris Charles de Gaulle Airport: corporate information and data gathered by MSC
• China Airport Commercial & Retail Summit, Shenzhen 3-‐5 Sep 2014: own and other
presentations
• China Travel Retail conference, Shanghai 11-‐13 Nov 2014: own and other presentations
• Dufry: annual report 2016, personal contact and corporate website
• Duty Free News International: many newsletters, news flashes and inside reports on the
airport retail and F&B industry
• FAB Conference, Manchester 23-‐25 January 2011: presentations
• Gebr. Heinemann: annual report 2016, personal contact and corporate website
• Generation Research: various cross-‐checks
• Hamburg Aviation conference, 13-‐15 Feb 2008: own and other presentations
• Hamburg Aviation conference, 9-‐11 Feb 2011: presentations
• HMSHost International: personal contact
• ICN Seoul Incheon Airport: corporate information and data gathered by MSC
• KAA: interviews with key managers, data, management presentations, corporate website,
annual reports
• Lagardère Travel Retail: annual report 2016, personal contact and corporate website
• LHR London Heathrow Airport: corporate information and data gathered by MSC
• Market Square Consult: various project dossiers
• Moodie Davitt Report, The: many newsletters, e-‐zines, news flashes, Foodie Reports, FAB
event coverage
• Schölvinck, Johan and Groot, Marnix: Trends in non-‐aviation business, published in
International Airport review, issue 3, May 2017
December 2017
• SSP: annual report 2016 and various trade journals

• SSP: personal contact
• Steer Davies Gleave: Heathrow Airport – Review of Commercial Revenues, Final Report April
2017 by the UK Civil Aviation Authority.
• Terrapinn Middle Eastern and North African Aviation outlook conference, Cairo 15-‐16 April
2010: own and other presentations
• TPE Taipei Taoyuan Airport: corporate information and data gathered by MSC
• Travel Retail Business: many e-‐letters, news flashes and inside reports on the airport Retail
and F&B industry.


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IATA NBO Nairobi Airport Report FINAL Dec 2017

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Jomo Kenyatta International Airport

Non-Aviation Business Performance

Tel: +1 514 874 0202 ext.3234

Address: International Air Transport Association

EXECUTIVE SUMMARY .............................................................................................................. 6

1. STEP 1: ASSESSMENT ...................................................................................................... 16

1.2 General impression ......................................................................................................... 16

1.3 Total airport income from non-aviation business ........................................................ 18

1.4 Terminal concessions: Airside Retail ............................................................................ 20

1.5 Terminal concessions: Airside Food & Beverage (F&B) ............................................. 26

1.6 Terminal concessions: Airside Services ....................................................................... 30

1.7 Landside terminal concessions: Retail, F&B and Services ......................................... 31

1.8 Airside / Landside concessions: a comparison ........................................................... 33

1.9 Terminal concession management ................................................................................ 33

1.10 Car parking ..................................................................................................................... 34

1.11 Car rental ........................................................................................................................ 35

1.12 Advertising ..................................................................................................................... 35

1.13 Business and VIP lounges ............................................................................................ 36

1.14 Terminal Office rentals .................................................................................................. 38

1.15 Taxis ................................................................................................................................ 38

1.16 Landside Real Estate ..................................................................................................... 38

1.17 Customer journey touchpoints .................................................................................... 40

2. STEP 2: BENCHMARK ....................................................................................................... 44

2.4 Area benchmark: Airside m2 per million dep pax ........................................................ 49

2.5 Area benchmark: Landside m2 per million dep pax ..................................................... 51

2.6 Category split: Airside Retail .......................................................................................... 53

2.7 Category split: Airside F&B ............................................................................................ 55

2.8 Benchmarking other non-aviation business ................................................................. 56

3. STEP 3: RECOMMENDATIONS ......................................................................................... 63

3.2 Airside F&B ...................................................................................................................... 70

3.3 Customer journey ............................................................................................................ 74

3.4 Terminal concession management ................................................................................ 76

3.5 Car parking ....................................................................................................................... 81

3.6 Taxis .................................................................................................................................. 83

3.7 Car rental .......................................................................................................................... 86

3.8 Advertising ....................................................................................................................... 87

INDEX OF TABLES AND FIGURES .......................................................................................... 90

1.#Current# 2.#Best#Prac0ce# 3.#Advice##

• Performance+ • Yards5cks+ • Strategy+

Assessment# Benchmark# Recommenda0ons#

Big Five animals welcoming the traveler at NBO

View on the landside terminal forecourt from Terminal 1D

Table 1 Total KAA revenues

Figure 1 Non-­‐aviation business income (numbers) 2

The Dufry Kenya walkthrough store in Terminal 1A

Zephyr House and Safari Duty Free in Terminal 1B

1.4.3 Airside Retail: Airport income

Income component KES EUR

Generic restaurant in Terminal 1C C Café in Terminal 2

Table 3 Airside F&B units per dwell-­‐time category

Income component KES EUR

1.8 Airside / Landside concessions: a comparison

1.13 Business and VIP lounges

The m ain Kenya Airways/SkyTeam Pride lounge in Terminal 1A

The secondary Kenya Airways/SkyTeam Simba lounge in Terminal 1A

The Aspire Lounge in Terminal 1B

The Turkish Airlines/Star Alliance/Priority Pass Lounge in Terminal 1B

4 Dubai DXB 2016 83.654.250 83.654.250 41,29 41,29 All Retail

2.3 Airport income from Retail and F&B (airside and

IATA Year Retail and

INT$airside$benchmark: Retail F&B Services Total

req$in$2025$at$3%$growth: &&&&&&&&&&&&4.169 &&&&&&&&&&&&2.605 &&&&&&&&&&&&&& 174 &&&&&&&&&&&&6.948 &&&&&4.631.945

req$in$2025$at$6%$growth: %%%%%%%%%%%%5.398 %%%%%%%%%%%%3.374 %%%%%%%%%%%%%% 225 %%%%%%%%%%%%8.996 (((((5.997.650

2.5 Area benchmark: Landside m2 per million dep pax

•  Performance+ •  Yards5cks+ •  Strategy+

Figure 1 Non-‐aviation business income (numbers) 2

Table 3 Airside F&B units per dwell-‐time category

Figure 1 Non-‐aviation business income (numbers) 19

Figure 2 Non-‐aviation business income (percentages) 19

Table 3 Airside F&B units per dwell-‐time category 29