Airport retailers part of Airport CDM?

In a recent meeting I was told that a retailer had approached the airport operator to become part of Airport Collaborative Decision Making (A-CDM). They found this rather strange and wanted to find out more.

The retailer had done some research on the passengers waiting in the gate area. They discovered that passengers waiting for the boarding of their delayed flight would not give up their seat - even though they might be hungry or thirsty. The retailer would take this opportunity and approach those passengers to take their orders. In order to be ready for those situations the retailer would like to have early information about delays.

What a great example of opportunities created by information sharing! However, this will require reliable and accurate information about an expected delay and most probably the retailer will not be happy by just providing a FIDS screen to monitor himself all the time.

Just another thought. Suppose that the delay is rather long? Why not changing the gate to keep passengers moving through the restaurants and shops?

When to publish the gate information?

How many hours before departure should the gate information be published? Airports would usually publish this information at fixed times, maybe when the operational day starts, maybe a few hours prior to departure, depending on whether it is an international, regional or domestic flight.

I am sure airlines will want the airport to publish the gate information as early as possible because they want the passengers at the gate to make sure that there is no delay because of late passengers. Now here comes retail and tells operation to publish the gate as late as possible in order to keep the passengers shopping. In other words, to increase the dwell time.

I  had a rather bad experience as a passenger last year in a shiny new terminal which seemed to be run by retail. There was no gate info available, neither on my boarding pass nor on the FIDS screens. This was not a problem, I was sure, I would get that information in due time. I used the time before the indicated boarding time to stroll around, maybe actually do some shopping. When the expected boarding time came closer, I noticed that I had changed my behaviour. I had started sneaking around a FIDS screen, hoping to get some update. Nothing. The expected boarding time passed by and we were getting towards the scheduled departure time. Now my comfort level dropped immediately. I started to check on other screens. The same. Then, right before the scheduled departure time, the gate was published and I was rushing to the gate. Upon arrival at the gate, the latest information there told me that the flight would be delayed by 20 minutes. Now, apart from this experience, do you think that the delay would only be 20 minutes without the boarding having started?

So, you have both extremes where the passenger already knows the gate upon check-in, and the other end where the airport waits until the latest possible moment which includes possible gate changes. Maybe the answer is something in the middle, where the gate is published based on the best information available, actually known as dynamic gate publication. In such an 'intelligent airport' the passenger will actually be steered through the terminal, i.e. the airport operation can direct the passenger flow. There is evidence that this works and even increases retail spend. See also this older post.

Free Wi-Fi At The Airport?

There is no such thing as free airport wi-fi. It is just a question of who pays to cover the cost of providing the service. You may have come across this site where they list airports that provide free Wi-Fi. Advertising and sponsorship may be a way on how airports can afford to provide it for free.

At an airport I visited recently, however, they changed back from free wi-fi to chargeable; even though they pay a substantial penalty to government for not providing the service for free. Obviously the revenue offsets the penalty by factors. In fact, at this airport, despite the passenger, everybody wins from this approach, including government.

As a passenger, I would expect this service to be free of charge. Yet, how to argue against additional revenue? What could be arguments for free wi-fi?

ASQ Rating

ASQ Survey results show that  airports that charge for the use of wi-fi achieve lower satisfaction levels than airports which provide the service free of charge. This most likely reflects the fact that passengers are used to free wi-fi in other public spaces and do not appreciate the need to pay while at the airport.

Passenger Tracking

Using the existing wi-fi receivers at the airport, passenger locations can be determined. This allows to see where passengers congregate, how much time they spend in stores and restaurants and where there may be bottlenecks. With a more accurate picture of where passengers are and what they are doing in the airport, the retail spending could increase.

Do you have more arguments so that we convince airports in providing wi-fi for free?

Let us grow off-peaks

Many airports continuously operate at or above capacity. Not necessarily throughout the day, but during peak hours. The most obvious solution to this problem is to make the airport infrastructure match the demand. However, there may be economical, political, environmental, space, time or other constraints preventing this. What about other approaches which are feasible without major investments and in a shorter timeframe?

Obviously, you can improve your current operational performance. You will find posts here about efficiency and effectivity, basically doing the right things right. There is, however, an area I have not explored yet, why not grow off-peaks? Let me explore two out of many textbook solutions to this problem.

Peak Pricing

One straight forward approach would be to differentiate the price of airport slots between different periods. There are often significant variations in the demand for slots at different times of day, on different days of the week and during different months of the year which can result in airports operating at full capacity at peak periods, whilst many slots may remain unused at off-peak periods. If the price of a peak period slot was higher than the price of an off-peak slot the demand for slots may be rescheduled.

Aviation Marketing

Aviation/airline marketing teams work together with airlines to explore market opportunities, support start-up operations and to help maintain a positive long-term partnership between the airline and the airport. Now this sounds great and simple to attract airlines for peak times. It may be hard though to attract them for off-peak periods, but let me give you an example on how this could be achieved. There may be this legacy carrier which is the only airline flying a specific route. Suppose you can convince an airline, e.g. a no frill airline, to operate to the same destination during off-peak times. How? Maybe you offer them a kick-back for every additional passenger on this route, including additional passengers flying on the legacy carrier. Winners? The airport, the new airline and ground handlers. Loosers? The legacy carrier which looses some yield, but do you care as an airport?

I am not sure whether this works at every airport, it has worked at least at one. Why not give it a try?

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.

Untapped revenue source for airports: information services

Nearly every airport has grown to depend upon the income generated from non-aeronautical means. With the sector in recovery mode, this is the perfect timing to revise the current strategies and help the airport business improve its revenue sources.

What about selling airport information? I understand that if an airport does not have such a business model as part of the concession with its airport users (airlines, ground handlers, etc.), it will be difficult to provide such a chargeable service.

However, it might be of great benefit for airlines, for instance, for them to control/monitor the service levels of their ground handlers (e.g. bag delivery times). They might be willing to pay a premium for access to such operational information without having to force them as part of the concession.

In my observation, an integrated Staff Information System (SIS) with flexible and scalable features can be can be sold to airport users at remarkable fees. Yet, its client deployment must be simple and access must be secure. No specific hardware or software must be required to access. All content must be filtered and easily adapted to users and roles by authorized users. The data must always up to date without the need to refresh them, even be available offline. The communication between server and client must be very lean and secure and not to require a lot of bandwidth.

You would be astonished how much revenue can be generated from selling access to such a SIS, to airport information in fact.