What is a potential disadvantage of having development companies manage airport concessions?

Choosing to have development companies manage airport concessions can indeed introduce an additional layer of costs. When a development company is brought in to oversee operations, they typically have their own fee structures, which can include management fees, profit margins, and various operational costs. This can lead to increased expenses for the airport authority compared to managing concessions directly.

This additional layer can divert funds away from other potential uses, such as improvements to airport facilities or passenger services, because a portion of the revenue generated from concessions must be shared with the development company. The involvement of a third party can complicate financial arrangements and negotiations, thus impacting the overall financial efficiency of the concession operations.

In contrast, managing concessions internally might allow for more streamlined operations, leading to potentially lower overhead costs and more direct revenue for the airport. While the involvement of development companies can bring expertise and efficiency in certain areas, the additional costs they bring can be significant and a notable disadvantage.