According to research from Mintel, many airports and operators such as Vienna, Stansted and Aer Rianta now make higher revenues from non-aeronautical services and facilities than from landing/airline fees. However, from a passenger service viewpoint it is about more than money. What constitutes good service in an airport? Short queues at check-in, easy to understand wayfinding, short security queues? We have undertaken passenger research into attitudes to processes at over 20 airports worldwide, collecting the views of over 30,000 passengers.
It is certainly fair to say that if the operational process is not smooth, then it quickly leads to passenger dissatisfaction. The recent security challenges at BAA's airports have highlighted some of the key issues. If the operational process is perfect then the feeling is one of relief rather than delight. On the other hand, introducing good commercial facilities can enhance passenger satisfaction levels, as well as help to identify and differentiate the airport.
Think for a moment about the image of airports for many passengers... excitement, glamour, far away destinations; indeed, holiday passengers often say that the holiday starts at the airport. Is this the reality offered by airports? Often the reality is long waits, long walks, nowhere to sit and little to do. Not a perfect recipe for delighted passengers.
Globalisation is the overriding factor for travelling in the 2000s. People fly more frequently, so the mystique of flying is gone. Personal experience is a good yardstick. I flew for the first time when I was 12, to Spain for a two-week holiday with my parents, on a package tour with a charter airline. My son is three years old. He has now taken ten or more international return flights, the longest of these being 12+ hours from London to Singapore.
Flying itself has become a commodity through the rapid expansion of low-cost airlines. Once the preserve of airports, global fashion brands can now be found in many downtown locations, removing the uniqueness of this airport shopping experience. People have greater choice in their everyday lives and are looking beyond shopping. In the UK, spending on leisure has overtaken spending in shops, as people look to buy experiences and memories rather than material things.
The price advantage long enjoyed by airports has been eroded, particularly in Europe with the demise of duty free. Many airport terminals look and feel the same, with ubiquitous design and architecture. The only thing that tells us where in the world we are is the currency in our pockets and the language on the signs. And yet, through all this, the time we actually spend in the terminal is increasing.
Airports are stressful -- they are crowded, noisy places where disorientation is easy. From a commercial point of view, however, it is crucial to understand how this stress manifests itself through the passenger journey. This stress is shown diagrammatically in Figure 1.
Figure 1: Airport stress chart
As passengers arrive at the airport, levels of anticipation and excitement rise. However, so do levels of stress.
As a passenger approaches check-in -- Where is the check-in desk? Are there queues? Did I remember to bring all tickets and passports? Did we put the cat out and turn off the gas and electricity? Did I pack everything?
After check-in, stress levels temporarily fall as passengers breathe their first sigh of relief, but then there is security and passport control to negotiate. In addition to long queues at security and immigration, the whole process can be very invasive, with bag and body searches.
After security and immigration, stress levels remain high for a short time while passengers orientate themselves to the departure lounge and seek flight information. Once these basic needs have been fulfilled, stress levels fall considerably, as passengers can relax prior to moving through to boarding, when stress levels again increase as passengers worry about finding the right gate, flight delays etc.
So from the point of view of shops and restaurants, it is very important that they are located in the departure lounge where passengers are most relaxed. Passengers can begin to enjoy themselves, and revenues can be maximised. This part of the process might easily be called 'happy hour'.
Passengers Like Retailing
In terms of using a good retailing environment to enhance the passenger experience and increase satisfaction it is worth noting the following points, all taken from Pragma Consulting's passenger research studies:
- Almost all passengers interviewed said that they like to feel that they can shop if they choose to.
- Passengers said they would feel 'cheated' if there was a poor selection of shops.
- Premium passengers also want easy access to the shops. It is not always the best solution to give premium passengers fast-track security directly into the business lounge.
'I would be disappointed if there were no shops. It would be terrible' -- business traveller, USA
'I went to an airport recently. There was one shop in the middle of this huge concourse, it was just so boring' -- business traveller, UK
- Eighty-five per cent of passengers want shops easily accessible from the departures lounge.
- Ninety-five per cent of passengers agreed that 'shops add colour and atmosphere to the terminal'.
- Over 60 per cent of passengers plan, in advance, to use shops and/or cafes at the airport.
Remember the leisure passengers starting their holiday:
'For me, part of the adventure of travelling is going to the shops (in the airport)' -- leisure traveller, UK
So, passengers like airport retailing, and the key issues for airports are:
- The waiting time must be maximised in order for passengers to spend.
- How can the process be streamlined to maximise time in the commercial areas?
- If the waiting time is maximised, is there enough for passengers to do?
- What is the airport doing to minimise stress and anxiety, in order to promote a positive process experience and increase sales in commercial outlets?
Steps to Success: A Logical Approach
Airports need to undertake a three-stage process to developing great retailing that appeals to their passengers.
First, it is crucial to understand the passenger experience and their mindset. It is vital to know passengers as intimately as possible.
Secondly, it is necessary to determine how much retail space is required and the best locations for this space. It is particularly important to concentrate on developing a commercial focus.
Thirdly, an offer must be developed that 'fits' with the passenger requirements. It is of little use placing a ladies' footwear shop in a terminal dominated by male business travellers. This may seem obvious, but we certainly see it happen. It is also important to create a 'sense of place'. Let passengers know that they have arrived in the shopping area of the airport. In addition, if the shopping area can promote a local feel then this will also help to create a compelling environment.
Research by Pragma Consulting suggests that a large proportion of passengers have high levels of disposable income. This is supported by figures published by BAA.1 For example at London Heathrow, 47 per cent of passengers fall into the top two (of five) UK social class categories compared with the national average of 25 per cent. In other walks of life these passengers appreciate comfort, quality, service and convenience. However, this is not always offered by airports, and one has to ask what is being done to meet the differing needs of passengers.
Passengers behave differently according to a number of factors, such as destination (domestic, short haul, long haul), and reason for travel (business, holiday, visiting family, etc). For example, business travellers fly very frequently, but stay away for short periods of time. The airport is an annoying interlude for these passengers, but with the right layout and mix it can be a very convenient place to shop for everyday requirements and business clothing. However, holiday passengers travel infrequently and may be away for a week or more. For these passengers the airport is part of the holiday experience. Therefore, retailing requirements focus more on trip enhancement and self-treat, with purchases such as cameras, sunglasses, perfume, or souvenirs/gifts for returning travellers.
So, for every part of the airport it is important to develop a passenger segmentation profile. For each terminal how many passengers are travelling to different types of location, and how many of these are travelling for business or leisure?
Once we have established a good understanding of the passenger base, it is necessary to determine how much retailing should be provided, and where it should be located. Although there are many international benchmarks to look at, I am afraid to say that there is not a 'one-size-fits-all' solution.
In order to determine the amount of retailing space and its location it is necessary to ask such questions as: What will the conversion rate and spending level be by passenger type? What target level of space productivity do we want to achieve? What are the flow routes of passengers through the airport, and where do they dwell? Where are the key parts of the passenger process located in relation to the commercial zones? Can we change the flow of passengers in order to be able to create more focused commercial zones?
It is important to understand passenger flows clearly. In an ideal situation, we would try to ensure that 100 per cent of passengers pass 100 per cent of the commercial facilities, particularly those located airside. In a number of projects, Pragma Consulting has looked at ways of combining passenger flows in multi-terminal scenarios. For example, Toulouse airport was advised to combine the flow of passengers in a new Terminal 3 with those in the existing Terminal 2 through one central security area, and to construct larger commercial facilities for nearly 4 million passengers, rather than two smaller facilities for a split passenger flow.
This will enable the airport to minimise the amount of duplication on offer to give greater choice to all passengers. Following work undertaken at the end of the 1990s, a similar scheme is under construction in Hamburg, with agreement reached on an airside shopping centre located between Terminals 2 and 4, to combine the flow of passengers into one focused shopping environment.
Once the location and size of the shopping area has been determined then the merchandise mix must match the needs of the terminal user. For example, business users will be attracted to stores that serve their everyday needs -- electricals, business clothing, business gifts, toiletries, books, etc. One airport examined had an excellent wine shop, with a wide choice and compelling displays. Unfortunately the store was located in a predominantly domestic terminal, where passengers could source wine far more cheaply in downtown locations. The international passengers the shop was aimed at departed from a completely different terminal. As a result the income of the outlet was poor. Relocation of the store could have increased sales by two or three times.
Finally, the design of the commercial area and stores can have a real impact on passenger spend levels. If possible, avoid straight lines for shop fronts, and ensure that the building structure does not obscure sightlines. Curved shop frontages help to improve visibility into shops, and allow airports to develop stores of varying sizes and depths to meet the differing needs of their retailers.
Clear signage for shop fronts is also important. Within guidelines, retailers should be allowed to develop their own shop fronts, signage and treatments. This will add excitement to the shops and ensure that a row of shops is not just a line of uniform, monotonous frontage. While it is important that the architecture of the airport building is treated sensitively it must not be allowed to dominate the shopping area. For example, see Figures 3 and 4.
The landside development at Zurich Airport was very architecturally led, with a key requirement being the introduction of natural light to the area. In addition there are several escalators passing through the commercial area, which already existed for passenger processing to and from the railway station. Curved frontages ensured that visibility of all retail units was optimised regardless of where a potential customer enters the space, and the oval shape of the retailing means that people can easily get an overview of the complete offer.
Figure 2: Landside shopping at Unique Zurich airport: Architecture and shopping in harmony
In Toulouse we were looking to draw on a 'downtown French boutique' feel in suggested design treatments for the commercial areas. This was about creating a unique, local flavour to the commercial areas rather than following international norms.
Figure 3: A potential design treatment for Toulouse airport -- creation of 'boutiques'
In an ideal world, airports should be branded to express their different personalities and cultures. This will make airports different, interesting, appealing and enjoyable, and give airports back the buzz and excitement that has gone missing in some cases.
Ultimately, the reason for going to an airport terminal is to have an experience appropriate to your needs and expectations when catching a flight, when meeting or saying goodbye, just having a look, or because you work there.
To end, one can go full circle and return to the opening theme of money. How much do you want to earn from your passengers?
Consider the example of a theoretical airport with 10 million passengers, of whom 5 million are departing and will have access to airside retailing.
If you get it slightly wrong, you may achieve a conversion rate of passenger to buyer of 30 per cent with an average transaction value of $30. This leads to sales of $45m. If a rental income rate of 15 per cent is applied to this then the airport will achieve revenues of $6.75m in one year.
On the other hand, if an airport gets it right then it should be possible to achieve a conversion rate of 50 per cent, with an average transaction value of $50. This would generate sales of $125m. Applying the same illustrative rental rate the revenue to the airport would be $18.75m, a difference of $12m per year -- with the addition of very happy customers.
(1) BAA Annual Report 2004/2005.
'This paper was originally published by Henry Stewart Publications in the Journal of Airport Management volume 1, no 2, pp. 151 - 157'