With duty free and travel retail sales set to top $100 billion by 2023, according to the latest data from Generation Research, it makes sense for airports to make the best of this vital stream of non-aeronautical revenue.
And cultivating loyalty among passengers so that they return to the airport and actively look to return to a particular store or F&B outlet in search of a favourite brand or dish is one way to keep the cash flowing.
Non-aeronautical revenue now accounts for well over two thirds of income in many airports, and with duty free and travel retail sales currently standing at over $60 billion a year, it’s worth investing in this potentially highly lucrative business. So what should airports be doing to encourage loyalty?
Undoubtedly the single most important thing airports can do, according to Erik Juul-Mortensen, president of TFWA, is to ensure that the airport processing experience is so smooth and slick that customers want to come back time and time again.
A swift and stress-free passage from landside to airside is fundamental to ensuring that passengers are in the mindset to spend.
Value also matters. “This is an issue across the commercial operations of an airport – if passengers feel they are being ripped off for parking or a cup of coffee, they are also likely to feel that the retail space offers similarly bad value,” he says.
But above and beyond providing this, what else can airports do?
The power of partnerships
Well-crafted loyalty programmes have had success at some airports. Juul-Mortensen points out that as in many aspects of running a successful non-aeronautical business at an airport, the most successful schemes depend on close co-operation among a number of partners.
Of course a number of airports are running successful loyalty programmes, working with their commercial partners. Similarly, some retailers have also implemented schemes that have performed well, often linked with their operations outside the airport.
DFS’s LOYAL T initiative at Hong Kong’s T Galleria shops, which rewards passengers with a tiered range of benefits according to their spend both at the airport and at the retailer’s outlets downtown, is a sterling example.
But many airlines have already ‘captured the hearts’ of passengers with well-established and sophisticated schemes, and much can be gained by working together, Juul-Mortensen believes.
The partnership between Lufthansa’s Miles & More scheme and retailer Gebr Heinemann is a case in point, says Juul-Mortensen.
“When airports get round the table with airlines and retailers, they can create a joined up offer that really delivers for the passenger. This is not easy, as the interests of each party are not always aligned,” says Juul-Mortensen.
He adds that it’s also important to ensure that each party benefits equally from such alliances. “The costs and advantages of these schemes must be shared between all parties,” he notes.
In an ideal world, these partnerships would be not only between the parties at an airport, but also between airports themselves, says Juul-Mortensen.
“Very few passengers have the energy or inclination to join programmes at several airports, while others don’t travel frequently enough to make being a member of more than a single airport programme worthwhile,” he says.
“This is something that has been considered by various parties, and although such a card would undoubtedly be a winner – it would be very difficult to pull together.”
Reasons to return
Loyalty isn’t just about cards and points, it’s also about providing passengers with reasons to keep flying through an airport.
“Many airport passengers are regular flyers, and we need to give these people something fresh and exciting as well as a sense of pride in the airport they use,” points out the TFWA chief.
Mignon Buckingham, managing director of global loyalty agency ICLP, agrees and adds: “When designing a loyalty programme for airports, we know we aren’t just talking to one type of customer – the most successful programmes will give value to the very regular traveller as well as the holidaymaker.”
ICLP believes that better understanding of customers as individuals is a crucial and often neglected element of running successful commercial operations at an airport.
“Airports know how many passengers pass through their gates and when and where they are travelling. But many don’t really know these people or anything about their likes, dislikes, habits and preferences,” suggests Buckingham.
“Without collecting this data and using it intelligently, they will never be able to truly drive loyalty.”
When it comes to encouraging airport customers to return, for example, deep understanding of the motivations of the customer and which aspects of using an airport are top of their list of must-haves is a priority.
ICLP recently conducted a survey into the relationships passengers have with the airports they use the most, and it found that many of the elements that airports aren’t able to influence, such as cost of fares or convenient transport links, were among the essentials in the decision-making process.
However, many of the factors that could sway choice are within their control. These include a number of elements that improve the convenience of travel, such as efficient security (77%), preferred airline (65%), or easily accessible parking (48%).
Others are swayed by the concepts that make the airport experience more pleasant, such as the food and beverage offering (44%), shop or restaurant offers and discounts from the airport (37%), a good choice of retailers (34%) and access to a premium airport lounge (34%).
People more than passengers
Developing a real understanding of the needs and desires of passengers is the first step in the process of ensuring the travelling customer returns.
“Fostering genuine loyalty depends on getting to know passengers at a personal level,” remarks Buckingham.
“We need to move away from seeing ‘the passenger as a statistic’ and towards ‘the passenger as a human’ which means really getting to grips with their personalities and habits, their likes and dislikes.”
From disinterested to devoted
To achieve this ‘up close and personal’ relationship, airports first need to give passengers good reason to engage with them and share information about themselves, according to Buckingham.
“We found that most people are open to having a two-way relationship with the airport, and nearly two-thirds (64%) already actively try to connect – whether that’s via the airport’s website or via social media,” she says.
“Many of these people will of course be looking for practical information on how to make their journey easier, such as details on flight departures, the best way of getting to the airport, or traffic news. But this clearly suggests that there might be an opportunity to develop that interaction and forge a deeper relationship.
“We need to ask what turns a routine journey into an outstanding experience, and what information we need to answer that question.”
For that first advance to happen, airports and retailers need to give passengers reasons to share information about themselves. To find out what these triggers might be, ICLP’s survey asked passengers what would tempt them to give up personal details.
Practical help was high on the list, and over 50% of respondents said they would share information in return for free Wi-Fi or flight notifications, while 35% of respondents would provide information in return for road traffic information.
Financial and more emotional incentives such as pre-flight vouchers (43%), shopping vouchers (42%) and loyalty cards (31%) also appealed.
“It’s about giving customers information and experiences they want in an engaging way which in turn provides the platform to incentivise the commercial behaviours that airports want to encourage,” comments Buckingham.
So there you have it, happy and engaged passengers are more likely to buy and become loyal customers in the years ahead, especially if the positive experience is repeated and even improved upon next time out.