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ECONOMICS Last modified on June 2, 2016

Let us entertain you!

 

Airports embracing the ‘experience economy’ will be one step ahead of their rivals when it comes to popularity and revenue generation, writes James Samperi.

Airport operators are moving from solely managing infrastructure to directly managing the customer experience within their facilities because it is not only the right thing to do but because it’s becoming the profitable thing to do. 

Indeed, the aviation business continues to evolve and airports are changing from solely B2B infrastructure businesses to consumer experiences businesses. 

Without doubt other commercial organisations envy airports, because they are largely guaranteed a diverse and captive audience that will engage with products and services if they have the time to do so, are in a good mood or are simply keen to make the most their time at the airport.

And airports for their part are becoming ever more imaginative about how to capitalise on these opportunities, today’s offerings increasingly valuing the importance of great service and embracing consumer technology to develop unique products and services that make the journey easier and more pleasurable. 

ACI’s Airport Economics Report for 2015 reveals that around 50% of non-aviation related revenues come from retail concessions and car parks. The mantra being to get people through necessary processes with time to spare to allow them to go shopping. 

This still holds true, of course, but consumer markets have completely changed over the last decade and passenger sophistication has increased as we’ve moved from consuming products, to services, and now to experiences. In other words we now seek out customisable and personalised experiences such as streaming our Spotify music in an Uber taxi or getting targeted recipe recommendations with our grocery shop. 

Retail has also evolved. Apple, for example, has arguably changed the paradigm for electronic retailing by shifting from simply displaying products to creating immersive environments where customers experience the product and all its service applications. 

And the philosophy clearly works because Apple stores are the most profitable by sales per square foot worldwide despite stocking considerably less product than other retailers, according to a 2015 article in Fortune magazine.

It’s a tough new world out there for retailers and it means that many airports will have to look at re-imagining how to attract new routes and airlines, retain passengers and increase spend, whilst attracting the right commercial partners.

The hub airports, in particular, are realising that experience really matters, as the majority of customers have a choice and it is here where we see some notable innovation examples. So what have airports done well in bridging the experience gap and making the most of captive revenue opportunities?

 

Taking more direct ownership over the end-to-end experience

Airports have been bringing together and managing different service providers and commercial partners to enhance the customer experience across all stages of their journey.

Amsterdam Schiphol, for instance, demonstrates how experience and operations can work together, with innovations in security to reduce stress and make the environment less imposing. The design supports passengers in preparing for screening, speeding up queues and improving secondary inspections. They’ve even included a passenger ‘re-composure’ area in which to gather possessions in comfort. 

Indeed, Schiphol’s security director, Ron Louwerse, has gone on record as stating that he believes that the next step for airports is to treat and view security as service rather than a necessity, and he thinks that his gateway can carry out this transformation without adding more costs.

 

Personalising the experience by combining the digital and physical environment

This is about capitalising and creating digital experiences that enhance how passengers navigate with real-time information and responsive wayfinding. 

Airports like Miami and Hong Kong are trialling beacon technology to offer traveller personalisation and automation for services ranging from directions, gate walk times, lounge access and boarding alerts. Several airports plan to take this further to include passenger offerings and commercial opportunities around retail and dining.

 

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Developing targeted products, services and experiences that meet customer needs

Passengers are different and need to be catered for as such. We’re seeing a more sophisticated understanding of the needs, wants and behaviours of customers to support the operation but, furthermore, help drive the development of the right products and services.

Manchester Airport Group (MAG) says that customer experience upgrade opportunities such as Escape Lounges, premium valet parking and fast track security clearance contributed towards a 6.7% rise in its revenues.

Meanwhile in the Gulf, Dubai Airports have focused on developing compelling experiences in order to attract and make the most of customers’ time as it realised many years ago that operating and sustaining one of the world’s busiest and, soon to be biggest airports, requires a different approach. 

So, rather than being an add-on, there’s a realisation that improving the passenger experience will, in turn, drive many other things sacred to airports such as operational efficiency and revenue generation. 

They’ve shifted from binary classifications of passengers by ticket type to a more sophisticated understanding of needs based on behaviours, attitudes and propensity to engage with certain services and experiences. As a result, their focus is on offering customers choice to navigate and spend time on their own terms and help customers help themselves through innovative technology. 

Customer experience now sits at the heart of their development strategy and all decisions come back to passengers’ needs, wants and desires. 

 

Finding ways to create a unique offer not found anywhere else

An ever-increasing number of airports are realising the need to create a unique ‘sense of place’ and this might be centred on bringing together many cultures, celebrating the temporal nature of the experience or it maybe capitalising on the 24/7 qualities of airports and showcasing the operation. 

Whatever it is, airports are distinctively different and have a largely guaranteed audience to look after and entertain, and one gateway that knows this and does this particularly well is Singapore Changi.

Singapore’s super hub is consistently cited as the benchmark for others to follow, in part due to the fact that it has long shown that it is not bound by conventions. A case in point is its ambitious plan for Project Jewel or Jewel Changi Airport as it has recently been rebranded.

Being built as an extension of Terminal 1 and accessible by pedestrian bridges from T2 and T3, Jewel Changi Airport is designed to be an experience first and an airport second so it should come as no surprise to learn that its centre-piece will be the world’s largest indoor waterfall at 130ft.

 

Becoming more responsive and empowering passengers

Airports are increasingly shifting from a responsive service model to a proactive one in a bid to set themselves apart from the rest and take customer service standards to the next level.

Heathrow recently demonstrated this with its ‘buy-before-you-board’ proposition that allows passengers to build a food hamper for their flight. The motivation for the new service being the changing eating habits of travellers that has led to a rising number of economy class travellers snubbing their on-board food offerings.

Make not mistake about it though, airports still have a long way to go on this front, because although they may be good at this from an operational perspective there is a lot of room for improvement in terms of the delivery of frontline products and services.

Summing up, the shift from infrastructure provider to experience provider is well on its way as airports realise the impact having a good time has on driving passenger numbers and increasing commercial performance, but there’s more work to do. After all, great experiences don’t just happen by chance. They are designed.  

About the author
James Samperi is a director at Engine, a UK-based team of designers, researchers and strategists specialising in design and development services. www.enginegroup.co.uk

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