Incentivizing growth

By Tobias Schoenberg, Casper Veenman, Gabriel Schillaci and Usman Tahir

Airports in the Middle East are pursuing ambitious growth – expanding passenger numbers, strengthening connectivity, boosting both aeronautical and non-aeronautical revenues and positioning themselves against leading global hubs. By 2040, the region’s airports are set to invest USD 151 billion in expansion projects, with annual passenger traffic projected to triple to USD 1.1 billion. This underscores the region’s pivotal role in global aviation, with worldwide passenger traffic forecast to reach 20 billion by 2042. In this article, we explore how incentive frameworks can help airports capture this growth, align stakeholders and turn their ambition into sustainable long-term advantage.

GCC airports have already shown strong recovery, with 2023 traffic reaching 97 percent of 2019 levels and regional connectivity growing 28 percent year-on-year in 2024 - among the fastest globally. In this context, incentives are more than financial discounts: They are strategic instruments that can align stakeholders, attract carriers and accelerate national mandates in tourism, logistics and economic diversification. However, success requires a structured and holistic approach. A case in point is Dubai’s decision to commit USD 35 billion to expand Al Maktoum International Airport into the world’s largest hub, with capacity for 260 million passengers annually. Emirates and Flydubai are set to relocate operations there in the 2030s with DXB International to be decommissioned. This illustrates how large-scale infrastructure expansion will require carefully designed incentive frameworks to attract and transition airlines, tenants and service providers.

Effective incentive strategies must reflect real drivers of attractiveness, such as market potential and operational reliability while aligning with each airport’s long-term vision and evolving beyond pricing toward value-sharing models. At the same time, airports need to remain legally and politically smart, working within regulatory boundaries while innovating in governance processes. When designed with intent, incentives become powerful tools to align stakeholders, guide investment and advance long-term goals, making a clear and targeted framework essential to ensure lasting impact rather than short-term gains.

To translate ambition into action, airports can apply a practical framework for redesigning airport incentives - moving from the “Why” (vision and traffic growth targets) to the “What” (stakeholders, commercial experience, roles) and ultimately the “How” (initiatives, roadmap and innovation). This structured approach ensures that incentive schemes are both operationally feasible and impactful for airlines, partners and the wider ecosystem.

Who benefits from incentives?

Incentives create value across the aviation ecosystem, but airlines benefit first and foremost, gaining fee waivers, reduced charges, marketing support and other financial relief – particularly when launching new routes or increasing frequencies. These measures lower the risk of expansion and improve the financial performance of flights, helping carriers grow sustainably.

Airports, in turn, achieve stronger traffic growth, better use of infrastructure and progress toward strategic milestones such as hub development. Importantly, the benefits extend beyond aeronautical charges. Every dollar that passengers spend in duty-free or retail outlets generates revenue for the airport under revenue-sharing models, where typically 20-40 percent of sales are returned. More passengers therefore translate not only into fuller terminals but also into stronger non-aeronautical revenue streams, which often account for up to 60 percent of EBITDA in leading airports worldwide.

Retailers also gain from increased passenger footfall and spending power. Premium brands, food and beverage operators, ground handlers and fuel suppliers all benefit from higher volumes, better utilization of resources and the opportunity to expand services.

Finally, the impact reaches the wider economy. More flights and passengers stimulate tourism, job creation, logistics activity and foreign investment. In the Middle East, the aviation sector delivers a powerful multiplier effect: Every USD 1 of aviation value added generates USD 3.60 in wider economic activity, underscoring why incentives are as much about national growth as they are about airport economics.

Aeronautical incentives

Aeronautical incentives are powerful levers for influencing airline behavior and creating long-term airport value. They can be designed to address a variety of strategic objectives, from growing and sustaining air connectivity to anchoring long-term partnerships, boosting infrastructure utilization, driving sustainability improvements and enhancing operational coordination. To be effective, such incentives should be structured as a multi-tiered system tailored to specific airline segments – for example legacy carriers, low-cost operators or cargo airlines – as well as route types, whether new, underserved or hub-contributing. Linking incentives to measurable achievements such as passenger volumes, frequency, load factor or environmental performance ensures that spending is directly tied to the desired outcomes and provides a clear return on investment.

Priority routes can be identified by applying structured scenario criteria that weigh up both route and airline dimensions. Route history, distance, passenger volumes and spend levels help determine attractiveness, while airline characteristics such as partnership status, carrier type, aircraft size and passenger mix further refine the analysis. For Middle East airports, this approach must be grounded in their own strategic objectives while also benchmarking against regional hubs with similar ambitions. In this way, the selected routes not only fit the airport’s growth priorities but also strengthen competitive positioning in the region.

Passenger-based incentives

Several aeronautical revenue parameters come into play when designing an effective passenger-based incentives strategy, including landing fees, passenger service charges (PSC) and parking charges. The impact depends on how well discount structures are aligned with strategic objectives. Airports can adjust the weight of each fee component to favor specific airline behaviors. For example, by lowering the Airport Building Charge (applied per passenger), airports can create stronger financial rewards for flights operating at higher load factors. This approach helps drive fuller aircraft and better asset utilization.

Key incentive models include:

• Volume-based rebates on specific routes or preferential rates linked to long-term seat or movement targets
• Cumulative rebates based on multi-year growth or tenure agreements
• Charge reductions for specific destinations to make operating from or to the airport more attractive
• Hub development bonuses to encourage feed from short-haul or regional carriers

At its core, passenger incentive design must be closely aligned with the airport’s traffic growth priorities and hub strategy, ensuring that discount structures stimulate sustainable demand, strengthen airline partnerships, enhance overall connectivity and at the same time improve asset utilization.

Cargo-based incentives

Cargo incentives follow a different set of dynamics but serve the same strategic goals: attracting operators, growing volumes and positioning the airport as a logistics hub of choice. Common tools include:

• Discounts on landing and ramp fees for increased volumes, reducing initial airline costs and stimulating traffic growth.
• Duty-free zones that allow storage, processing and re-export of goods without immediate customs clearance
• Co-funding marketing and promotional campaigns for new cargo routes to help airlines build awareness and secure demand

Ultimately, cargo incentive design must be tightly linked to the airport’s specific cargo flows and the direction of regional trade, ensuring that offers align with actual growth opportunities.

Other incentives

Airports are also introducing innovative incentive models that go beyond the traditional passenger-cargo split. The aim remains to attract airlines and stimulate regional growth.

Examples include:

• Risk-sharing guarantees – Airports reduce the commercial risk for airlines launching new routes by guaranteeing a minimum revenue level. If a new service underperforms in its first year, the airport may cover part of the shortfall. This gives carriers confidence to test new destinations without bearing all the initial risk. Similar models have been used by regional airports in Europe to attract long-haul carriers
• Gamified airline loyalty programs – Similar to frequent-flyer schemes, these reward airlines for behaviors such as increasing seasonal flights, introducing more fuel-efficient aircraft or sustaining high load factors. Points earned can be exchanged for fee reductions, priority slots or ground-handling discounts, aligning airline incentives with airport growth and sustainability goals in a trackable way
• Tourism and economic impact incentives – Some airports link incentives to measurable contributions to the local economy. Airlines that drive higher hotel occupancy, longer visitor stays or more inbound spending can qualify for incentives, for example
• Sustainability-linked incentives – With aviation under pressure to pressure to decarbonize , airports can offer fee reductions or credits for airlines that adopt cleaner operations, for example through sustainable aviation fuel (SAF), more efficient aircraft or reduced auxiliary power use. Airports such as Amsterdam Schiphol and London Heathrow already apply such schemes, and Middle Eastern hubs can adapt them to strengthen their sustainability leadership

These mechanisms are increasingly important in competitive, strategy-led airport environments where price alone is not enough. They help airports future-proof their value proposition.

Non-aeronautical incentives

Beyond aviation, airports rely heavily on commercial offerings to boost revenue, enhance the passenger experience and reinforce strategic positioning. For many, non-aeronautical revenue is no longer a “nice to have” but rather a core pillar of long-term economic sustainability, with up to 60 percent of airport EBITDA generated from non-aero activities. As commercial expectations rise and new operators enter the market, targeted incentives help attract high-performing tenants, enhance the commercial mix, reduce vacancy, improve space utilization, raise service quality in retail and food & beverage (F&B), optimize parking and mobility revenues, and monetize terminal space more effectively across categories.

To achieve these objectives, airports are deploying a wide range of measures. Retailer incentives are tailored to attract brands that complement the existing mix, expanding commercial diversity and tenant quality. Service-linked lease terms reward operators that maintain consistent standards, while flexible parking models or revenue-share partnerships increase usage and convenience. Airports are also experimenting with temporary brand-sponsored lounges or experiential spaces that create unique passenger interactions, enhance brand visibility and draw premium retail partnerships. Together, these measures reinforce non-aeronautical performance by attracting stronger tenants, improving service quality and maximizing commercial yield, while positioning the airport as a competitive commercial destination.

Aviation services incentives

Aviation services providers such as ground handlers, fuel suppliers and GSE operators are critical enablers of airport performance. As airports grow in complexity and ambition, many are extending incentive schemes to these partners to strengthen alignment and improve service delivery. The strategic goals are wide-ranging: Airports want to enhance transparency on performance risks, accelerate equipment modernization, build operational resilience, support sustainability initiatives, improve service quality and expand capacity.

To achieve these aims, airports are experimenting with a variety of incentive models. Financial rewards can be offered for data sharing on service performance, helping identify root causes between airline and service provider and enabling prediction of delays at the airport level. Airports may also provide investment support for the purchase of GSEs in exchange for reduced equipment rent charges. Joint training subsidies can raise service quality, while preferential charges are used to attract new providers or push for additional capacity. Together, these approaches strengthen collaboration across the airport ecosystem, ensuring smoother operations and better service outcomes.

Navigating regulations and governance

Designing effective incentives is not only about commercial logic: It also requires careful alignment with existing regulatory frameworks. In Saudi Arabia, airports operate under the oversight of the General Authority of Civil Aviation (GACA), while in the wider Gulf similar roles are played by the UAE’s General Civil Aviation Authority (GCAA) and Qatar’s Civil Aviation Authority (QCAA). These bodies set policies for aeronautical charges, safety and competition, and in some cases principles from national competition authorities, such as Saudi Arabia’s GAC, must also be observed when incentives affect market dynamics among service providers, retailers or airlines.

To remain compliant, incentive schemes need to follow clear principles: They must adhere to civil aviation regulations on charge setting and discounts, maintain transparency across airline and tenant categories, avoid preferential treatment that undermines fair access, and be backed by economic justification and measurable outcomes. Incentives should also be linked to quality-of-service performance, with penalties and rewards defined in advance.

Leading airports globally embed such principles into their governance. They ringfence incentive budgets, use dashboards to track ROI, partner performance and passenger satisfaction, and document program logic for regulatory review. Manchester-Boston Airport, for example, maintains a dedicated Air Service Incentive Plan (ASIP) with budget lines for landing fee waivers and marketing support, strictly managed within its financial cycle. Dublin Airport similarly applies incentives for longhaul route development, closely monitored for performance and market impact. By institutionalizing incentive governance and embedding transparency, airports ensure their incentive strategies are both competitive and defensible under regulatory scrutiny.

Making incentives work

Designing incentives is only the first step; delivering impact requires strong governance and collaboration across the airport ecosystem. Airports need structured governance with dedicated units to manage budgets and ensure compliance, while ring-fenced funding prevents ad hoc decisions. Stakeholder consultation brings in airlines, ground handlers and regulators through workshops or negotiations to test whether incentives are workable and aligned with national goals. Performance indicators must link incentives to measurable outcomes such as traffic growth, load factors or customer satisfaction, with disbursements tied to clear thresholds – for example, only if a new route achieves at least 70 percent seat load factor within two years. Ongoing monitoring and feedback keep schemes relevant and track ROI, using dashboards and regular reviews to adapt as needed. By embedding these steps into every program, airports ensure incentives become strategic tools for sustainable growth rather than temporary discounts.

Airports across the Middle East stand at a pivotal juncture, uniquely positioned to contribute to the region’s ambitious transformation agendas by evolving into leading global aviation hubs. The strategic development and implementation of innovative and transparent incentive frameworks is not merely an operational enhancement but a fundamental strategic imperative. By adapting global best practices in both aeronautical and non-aeronautical domains, airports in the region can sharpen their competitive edge. This means moving towards more granular, performance-based aeronautical incentives that share risk with airlines, while at the same time advancing non-aeronautical strategies that harness digital transformation and foster deep commercial partnerships, reimagining airports as destinations in their own right.

The enabling environment shaped by progressive regulators such as GACA, GCAA and QCAA, combined with national economic diversification programs, provides a strong foundation for these initiatives. By proactively designing and deploying advanced incentive schemes, Middle Eastern airports can attract strategic airline partners, diversify revenue streams and deliver world-class passenger experiences. This forward-looking approach reinforces the region’s role as a dynamic and competitive global gateway, driving growth and enhancing its international standing in the aviation sector.