Digital transformation is happening in all industries. For airports, it involves transforming established processes and services to improve their operations to deliver a better experience to all passengers and customers.
With the extensive use of smartphones, tablets and laptops, the internet of things – as well as in-store touchpoints such as kiosks and magic mirrors – passengers now have different ways of interacting directly with businesses and purchasing goods. The border between the physical and the digital has blurred, and customers are increasingly navigating both worlds.
As such, airports are catering to the needs of their customers by offering ‘phygital’ experiences. As the name suggests, phygital is a concept that describes the blending of digital experiences with physical ones, taking the best aspects from each space to create the optimal customer experience.
While digital retail offers immediacy, for instance, immersion, and speed, physical retail offers the human experience and a more sensorial experience.
ACI encourages airports to explore the phygital, which will be the theme of this year’s The Trinity Forum, the world’s most influential airport commercial revenues conference, taking place this year in Doha, Qatar, from October 30-31, 2019.
Under the theme ‘Reimagining the Trinity’s role in a phygital world’, we will delve into topics such as: reimagining the airport commercial model, demographic challenges and online competition, new shopping frontiers, and the power of the trinity partnership, among other pertinent topics.
Embracing the phygital helps airports to develop new revenue streams that are in line with evolving passenger needs and to gain a competitive advantage. Customer experience is crucial for an airport and ACI’s Research Report has shown that an increase in passenger satisfaction, as defined in the ASQ Survey, generates growth in non-aeronautical revenue.
According to the latest ACI Airport Economics Report, airports worldwide earned more than $172 billion in 2017, up 6.2% from the year before. Airports’ revenues come from aeronautical (55.8%), non-operating (4.3%), and non-aeronautical revenue (39.9%).
On average however, aeronautical revenue does not cover capital and operating costs, and airports very much rely on commercial, or non-aeronautical revenue, to determine their financial viability. In addition, non-aeronautical revenue generates a higher profit margin and thus contributes more to financial sustainability and the capacity to withstand traffic volatility.
The challenge and opportunity for airports and airport retailers worldwide is to safeguard and develop the commercial side of airports by evolving in step with customer expectations. This involves forging innovative business partnerships and developing new revenue streams and commercial models that embrace the digitalisation of airports – including the phygital.
From the viewpoint of the passenger, a phygital experience may just mean a more personalised and individual experience, one that also offers a seamless flow through the airport.
Many airports are already picking up on the trend, particularly through the offline/online shopping of products, food and beverage and services. While duty free airport zones are ideal venues for showcasing products, offering online purchasing options to reduce travelling inventory provides airport retailers and brands with a different revenue model adept for the future.
Auckland Airport, for example, offers a digitalised downtown shopping experience where customers can purchase tax-free products from more than 200 retailers located in the city’s actual downtown without complicated tax-refund forms. Purchased products from these retailers are automatically delivered in a single shopping basket to the airport before the passenger’s departure.
Another example is augmented Reality (AR), which blends the virtual with the actual to make real life more engaging and which is being used for wayfinding to help passengers navigate at the airport.
Geolocation information can also enhance the passenger experience by offering purchasing recommendations, travel alerts and other personalised information.
All of this will be explored at The Trinity Forum, a joint venture between The Moodie Davitt Report, ACI World and ACI Asia-Pacific, which this year is being jointly hosted by Hamad International Airport, Qatar Airways and Qatar Duty Free. I look forward to welcoming you to Doha.