Wednesday, May 19, 2010

Retail versus Airport Operations

One responsibility is taking care of the operations side of the business. You know, making sure the passengers flow smoothly through the airport, bags are sorted well and travel with the passenger, the aircraft is departing on time, etc. Then there is the responsibility of collecting car parking fees, generating sales at the airport shops, etc.

The primary reason for conflicts between retail and operations is because they have conflicting objectives. Retailers aim for larger shopping areas and more dwell time, whilst operations wants to provide short transfer times, fast and direct passenger flows and on-time departures.

There are a few ideas which actually address both businesses. Suppose the policy at an airport is to announce gates at fixed times and as early as possible. This makes sure that passenger flows can be anticipated and passengers are at the gate. On the other hand, retail would like to have the gate announced as late as possible to increase the dwell time.

Why must the gate be announced at fixed times? Maybe because it is a standard operating procedure, maybe IT systems are set up like that, maybe operations do not know what the best time to announce would be. Experience shows that given operations has the capability and tools to decide on when to announce the gate, they can direct passengers through the airport, in fact reducing queue times at bottlenecks. At the same time, additional dwell time increases passenger spend rate, mostly on high street stores. Hence, both, operations and retail win.

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