Kochi Airport (COK) makes more money from Duty Free than Flight Operations

Yes, Kochi Airport, or as it is officially know as Cochin International Airport (COK) run and owned by the Cochin International Airport Limited (CIAL) is in the news for commissioning its 12MW solar power plant with the aim to be the first airport to be run entirely by solar power.

It’s a great initiative. According to it’s latest annual report, the airport spends approximately $2.2 million to purchase electricity.

Here is a another interesting fact we found in the annual report:

CIAL Annual Report
From CIAL Annual Report 2014 – 2015.

Foreign exchange earning for the year (1 April 2014 to 31 March 2015) show that income from airport charges have drop to just under seven thousand rupees (roughly $100). Down from over 767, 726 rupees the previous year ($11,000). That’s a pretty steep drop but I don’t think anyone needs to lose sleep.

The airport has earned over 1.62 billion rupees from its duty free shop. That’s $26 million. Nothing else comes close to it. The Airport’s total income for the year was roughly $66.6 million. That’s roughly 40% of the total income. Not bad.

CIAL Annual Report 2015
CIAL Annual Report 2015

According to this report in The Hindu:

Presently, the airport company runs a cluster of duty-free shops on an area of 10,000 square feet and plans to expand the business to 40,000 square feet with the opening of its upcoming international terminal.

The Kochi Airport is not unique. Duty Free and retail makes up a good portion of airports globally. For example, Heathrow got 21.3% of its income from retail in 2010, compared to 53% from aeronautical.

Here is a table from a study done on Non-Aviation Revenue in the Airport Business – Evaluating Performance Measurement for a Changing Value Proposition by Max J Zenglein and Jürgen Müller of Berlin School of Economics. It’s a bit dated and the data shown below are from 2005.

German Airports 2005
German Airports 2005

The same is true for North America:

In 2012, according to the FAA, U.S. airports generated $9.31 billion in aeronautical revenue, and that was 55.2% of total operating revenue. Non-aeronautical revenue wasn’t too far behind, amounting to $7.56 billion, or 44.8% of total operating revenue.

Cochin Airport (CIAL) although majority owned by the government is a private company. It has become successful example of Public Private Partnership model. The duty free is managed directly by the airport and the Air Kerala venture (low cost international and domestic service) is a subsidiary of the airport company.

If India allows open skies, Kochi (COK) can be a hub for international air traffic from Middle East and Europe to South East Asia and Australia. Also Africa to Asia routes. It’s an untapped gold mine.

Flight routes via Flight Radar24
Flight routes via Flight Radar24

The airport can invite flights flying above to make a stop for free and make money from the shopping and F&B.

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