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ACI director general, Angela Gittens, reflects on the role retail/F&B concessions play in raising revenue and boosting passenger satisfaction levels.

In business, the relationship between customer satisfaction and revenue is crucial and this relationship has long been fundamental in the analysis of airport business performance.

In this competitive environment, airports face increasing pressures to improve efficiency and diversify their product and service offerings while continuing to maintain the highest levels of safety and security.

As airports have limited opportunities to raise aeronautical revenue, a focus on non-aeronautical revenue has become an imperative to maintain operations and accommodate growth in air service demand. This source of revenue may be derived from rents received from or fees charged to companies offering a wide range of services to passengers, including retail, food and beverage, banking, advertising, car parking and car rentals.

Worldwide in 2016, retail concessions remained the leading source of non-aeronautical revenue for airports, representing 28.8% of non-aeronautical revenue. Car parking revenue and property revenue/rent followed retail concessions as the next largest  sources of non-aeronautical revenue at 20.5% and 15% respectively.

Retail marketing specialists have long demonstrated a clear relationship between customer satisfaction levels and the propensity to spend. As non-aeronautical revenue streams become an increasingly important focus for airports so the potential link between passenger satisfaction and non-aeronautical revenue demands closer investigation, opening the potential for a powerful new strategic approach to raising non-aeronautical revenue performance.

The ACI Airport Service Quality (ASQ) programme assesses customer service perceptions through the airport industry’s most sophisticated measure of customer satisfaction, creating a platform for detailed analysis of the influence of service levels on non-aeronautical revenue performance. Supplemented by ACI’s annual Airport Economics Report, analysis of this uniquely comprehensive data demonstrates the existence of a positive relationship between a clearly defined series of customer service variables and the growth of non-aeronautical revenue.

The ACI research entitled ‘Does passenger satisfaction increase airport non-aeronautical revenues?’ shows that there is a positive link between overall passenger satisfaction and non-aeronautical revenue. On average, when satisfaction increases by 1%, non-aeronautical revenue increases by 1.5%. The correlation was stronger than that of adding retail space or an increase in the number of passengers. This suggests that if airports invest in satisfying the service expectations of passengers, everything else being constant, passengers would spend more.

The 2018 Airport Economics Report suggests that, on average, non-aeronautical revenue generates as much as 40% of an airport’s total revenue. Within this category, the Middle East continued to have the highest proportion of non-aeronautical revenue attributed to retail concession at 56%, followed by Asia-Pacific at 41.6%.

The fastest growing non-aeronautical revenue category in 2016 was F&B with 11.2% growth. Based on the latest ASQ Departures survey scores relating to ‘Restaurant/eating facilities’, ‘Value for money of restaurant/eating facilities’, ‘Shopping facilities’, and ‘Value for money of shopping facilities’, we see the following:

  • Restaurant and eating facilities consistently score the best among the four items of interest at global level.
  • Value for money of the shopping facilities has seen the biggest increase in satisfaction at global level.
  • From a regional perspective, Asia-Pacific is where the satisfaction increased the most and consistently among all four items while Europe and Middle East remained relatively stable with slight increases in score, for all four items.
  • In Asia-Pacific, it’s the shopping facilities item that obtained the highest score closely followed by restaurant and eating facilities.

After all, every flight begins and ends at an airport and there is no better experience than indulging in a quick bite or savouring a delicious meal. Airport food and beverage sales have yet to reach saturation point and this area of the airport business represents an opportunity for operators and suppliers. And despite the rise of e-commerce, airports can’t lose sight of the physical shopping experience.

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