Live Markets, Charts & Financial News

Ben Gurion airport Terminal 3 set for enlargement

0 27

Over the past decade there has been a significant increase in the number of passengers using Ben Gurion airport. This year 25 million passengers will pass through the airport, beating the previous record in 2019 before the Covid pandemic.

In 2022, passengers spent NIS 2.4 billion in the stores, restaurants and cafes in Ben Gurion airport’s Terminal 1 and Terminal 3. The increase in passenger traffic is also characterized by a change in the composition of the passengers. For example, more children and more passengers fly more than once a year. These changes also affect commercial demand at the airport.

In 2024, the Terminal 3 expansion project will begin, as part of which the commercial space will be expanded, and the operational infrastructure will be enlarged, with the aim of adjusting the scale of the terminal’s activity to future passenger capacity. There are today already many complaints about overcrowding at the airport.

At the same time as the physical expansion of the commercial space, the Israel Airports Authority will upgrade and increase the mix of existing shops, eateries and cafes, while expanding the variety, and supervising price levels in the food outlets and cafes.

Czamanski & Ben Shahar has supported the Israel Airports Authority in the overall development of its income producing real estate and commercial space, and in this context examined the trends, and the demand for commercial space, and the required adjustments to them. In accordance with the recommendations, the Israel Airports Authority is implementing a new marketing strategy in the tenders that have been published and will be published in the coming weeks. Among other things, stress will be placed on increasing variety and paying attention to the needs of passengers while adjusting supply to the demands of passengers.

Record of 25 million

Ben Gurion airport serves as Israel’s main entrance and exit. Over the last decade, there has been a substantial increase in flight traffic, and during this period the number of passengers has more than doubled. The upward trend was halted during the Covid pandemic, with a dramatic decrease in the number of arrivals and departures. But according to the Israel Airports Authority, passenger traffic has rebounded strongly and should reach 25 million by the end of 2023, an all-time high.

Today, 49 businesses operate at Ben Gurion airport including retail stores, money changers, food and drink outlets, passenger lounges, and more. In 2022, revenue for all businesses serving passengers at the airport (not just retail trade) was NIS 5 billion, with NIS 9,500 revenue per average minute.







Annual revenue cafes and food and drink outlets was NIS 350 million and NIS 2 billion for the retail stores. These data reflect an average daily revenue of NIS 6.6 million for the catering businesses and stores only, and an average revenue per minute of NIS 4,600. Food outlets and cafes cover 3,000 square meters and there are 8,000 square meters of retail stores.

What do the passengers want

In 2024, the Israel Airports Authority will expand the terminal to adapt the infrastructure to the significant increase in passenger traffic. Another wing will be built to increase capacity for the number of flights, while the area of the check-in counters will be expanded and more. There will be a major addition of commercial space, food outlets and cafes covering thousands of square meters, to serve even more passengers and improve and upgrade facilities for the current number of passengers.

The expansion of the terminal and the addition of commercial space provides an opportunity to improve existing space and adapt it to passenger demands. An updated marketing strategy was designed by the Authority, with our advice and support, regarding the food outlet areas, cafes and stores, with the aim of addressing the changes that have occurred and will occur in the coming years. All this in accordance with the current needs of the passengers, the changes occurring in the world of commerce and retail, and consumer preferences of the Y and Z generations, and in the future also the alpha generation, taking into account what is possible from an economic and marketing point of view.

Over the years there have been changes in the mix of passengers, with lower fares, an increase in the number of trips per person each year, more family trips and more. In addition, the changes in the local market, with the increase in commerce via the Internet that affects the competitive environment and supply in Israel, affects and will affect, the revenue from passengers in the various duty free shops. These trends required a rethinking of the commercial and catering areas in the terminal.

In addition, this year we conducted a comprehensive survey for the Airports Authority on the demand and consumption habits of passengers in the terminal. Based on a nationwide and representative internet survey of those who actually flew in the past year, including the Arab community, the average expenditure for passengers who ate at the airport’s cafes and restaurants was NIS 57 in 2022.

41% of the passengers believe that in order to improve the existing food and drink on offer, prices must be lowered, and 35% believe that it is necessary to increase the variety. About 90% are interested in the addition of cafes and restaurants at affordable prices.

Recently, tenders were published for the operation of food outlets and cafes in Ben Gurion airport, which were adapted to current trends in the retail market, both international and local, with the aim of improving and upgrading the passenger experience.

As part of this, food areas and cafes will be added, and for the first time a tender will also be published for the operation of an area for packaged fast food as well as tenders for opening a pizzeria and deli, in addition to other restaurants that will be opened later as the terminal expansion progresses. A branch of the Moses hamburger chain is currently being built.

Regarding price, which appeared in the survey among passengers, the Authority has revised its marketing strategy, which is significant news for passengers who want to eat in restaurants and cafes. All the catering tenders include products whose price will be controlled and will be sold at the same price as the price of those products sold in the chain’s branches throughout the country.

In addition, leading products will be included that will be under supervision and at a relatively low maximum price set by the Authority, without change throughout the contract period. For example, espresso or mineral water will be sold for NIS 8, and an Americano coffee or a large croissant will be sold for only NIS 12.

The new mix

The food areas, cafes, and stores in the airport today do not serve optimally and are being adapted to the size and characteristics of the passenger demand. Changes that have occurred in the type of passengers, changes that relate specifically to the terminal experience together with general changes in the commercial market, along with the increase in the number of passengers each year, require changes and adjustments among the businesses operating in the terminal.

After strategic thinking, the Authority is expanding commercial activity at the airport and upgrading the variety and supply. Due to complaints about prices of products, as part of the new tenders, stress was placed on price control as well as adjusting prices existing in the chains to their branches in the rest of the country.

Along with the increase in passenger traffic in the coming years, commercial space in the airport will gradually increase. A successful mix of a variety of shops and food options and cafes will increase revenue per passenger and, at the same time, their level of satisfaction.

The author is the CEO of economic consultants Czamanski & Ben Shahar Ltd. Analyst Yehuda Weixelbaum participated in writing this article. Full disclosure: Czamanski & Ben Shahar Ltd. acts as a consultant to the Israel Airports Authority

Published by Globes, Israel business news – en.globes.co.il – on September 21, 2023.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2023.


Leave A Reply

Your email address will not be published.