What is a common payment structure for airport concessions?

A common payment structure for airport concessions is to have an annual minimum payment coupled with a percentage of gross revenue. This model provides a balanced approach that ensures the airport receives a stable income while also allowing concessionaires to pay a fee that reflects their business's performance. The annual minimum payment guarantees a baseline revenue stream for the airport, which can be helpful for budgeting and financial planning.

In addition, the percentage of gross revenue aligns the interests of both parties. As the concessionaire's sales grow, so do the payments to the airport, fostering a mutually beneficial relationship. This structure incentivizes concessionaires to increase their sales while ensuring that the airport benefits from their success. This approach is prevalent because it allows the airport to adjust its revenue expectations based on actual sales, making it less risky for both parties compared to fixed payment structures that might not reflect the true performance of the businesses.