Wednesday, September 1, 2010

Do you spend more when your flight is delayed?

When retail spending at an airport is stronger than passenger growth, it is a sign that the airport is encouraging travelers to spend more. The duty free revenue at Abu Dhabi International Airport outpaced passenger growth in the first half of 2010. According to Abu Dhabi Airports Company (ADAC), this is because consumer confidence is returning, and ADAC’s investment program and upgraded retail offerings.

Zurich Airport Shopping

From discussions with airport commercial managers I understand that there are a number of factors which influence the passenger spend rate. Some of them are mentioned above. One important factor seems to be dwell time which is the time, passengers spend at the airport. Obviously, waiting in a queue reduces the dwell time and hence reduces airport retail revenue. There is consent between retail and operations that the passenger flow should efficient (but not too efficient).

We wanted to know the impact of delays on passenger spend. There is a general perception in the industry that more delays mean more passenger spend. We wanted to prove them differently hoping to additionally support the case to improve on-time performance.

We compared passenger spend with delays at Zurich airport. Here is what we found:
  • There is a trend towards lower revenue with better departure punctuality. At the same time the passenger spend rate declines with more delays.
  • With more delays, delay cost offset additional retail revenue.
  • Passenger spend rate fluctuates, irrespective of delays, in particular depending on passenger categories. For instance, during holiday season they are lower than year average. Should be considered in further analysis.

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