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NEWS Last modified on November 13, 2017

Keeping grounded: why airlines are investing in airports

In an increasingly competitive environment, it is easy to miss one of the key trends that will determine the winners and losers in the fight for passengers: the experience airlines offer on the ground, writes Errol McGlothan.

This is becoming a key battleground for airlines today and one that is likely to get even more dynamic and competitive oin the future.

At one end of the scale, premium carriers are focusing on exclusive and luxurious airport experiences.

In the US, American Airlines is putting forward $5.7bn per year to support lounge renovations and aircraft retrofits.

The recent launch of United’s new business class product, Polaris has been well received, in particular its exclusive new flagship lounge.

Likewise, the large Middle Eastern carriers have been investing in luxury experiences on the ground.

The Emirates First Class Lounge at Dubai Airport includes an enviable wine cellar and cigar bar; meanwhile Oman Air’s First Class Lounge at Muscat Airport provides personal chefs and a chauffeur transfer to the plane.
Sleep Pods Dubai Airport
Dubai International Airport has also recently added space-age ‘sleep pods’ where passengers can rest.

Low-cost carriers such as Norwegian and Level are also entering the market and looking to offer premium passenger experiences that start in the airport, typically through lounges.

There is now real choice available for travellers, at whichever price point suits them. This choice drives competition and means that airlines need to up their game to attract customers.

There are other factors driving the focus on ground experience, too. Investments in in-flight improvements are incredibly costly, especially given the flux that we see in the market.

Airlines are looking to save costs and pool resources through alliances where they can, whilst continuing to deliver an exceptional experience. Investing in shared-use ground experiences is a cost-effective way of achieving this.

Ensuring a positive experience on the ground is an ongoing challenge. The complete passenger journey is often highly inconsistent. Travellers can pay $10,000 for a first-class ticket for a premium in-flight experience, yet still have to navigate increasingly congested airports.
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Booming growth in travel numbers and continued high levels of security are driving wait times. This is increasing demand for services to help improve the airport experience.

My company, Airport Lounge Development, is already partnering with airlines and airports to improve the experience they offer passengers on the ground.

Firstly, we’re helping airlines turn their existing ground assets into more profitable spaces. 

For example, we’ve taken over a lounge from a major international airline brand to provide a service to their premium passengers whilst offering use of the lounge to other customers outside of the airline’s main operating window. 

As a result, the space is now far more efficient and cost effective to the airline, ensuring a positive ground experience in a way that makes sense to the bottom line.

Secondly, we’re working with airlines to jointly develop new spaces that can be used by all passengers – premium or independent.

Our work in this space means that all travellers can access excellent on-the-ground services, designed around their needs and budget. 
Virgin Clubhouse
We offer a variety of lounge options including a ‘lounge within a lounge’, which allows the airline to design their area of the lounge to their own brand specifications and provide bespoke cultural food options.

There is a lot of innovation taking place on the ground at the moment to deliver a good experience to travellers, from sleep pods to fast track access and wellness spas.

The challenge for airlines going forward will be to determine how to package these services in the right way for these customers.

While full-service airlines may bundle them in existing ticket prices, low-cost carriers may instead offer them as premium add-ons. Either way, the innovation is good news for travellers, as airports and airlines offer them increasingly unique, premium experiences.

• Errol McGlothan is director of Airport Lounge Development

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