Retail is Detail: How Knowing Your Customer Helps Maximise Non-Aeronautical Revenue

You’ve checked in and dropped off that cumbersome suitcase. You’re getting into vacation mode, but you still have time to kill before your flight. What next? A glass of wine? Something from duty free? Or perhaps some clothes shopping for that evening event?

These days, terminals are offering a plethora of brands, tempting passengers to purchase anything from essential toiletries to designer clothing. So what is the rationale behind this explosion in retail offerings, and is it what passengers want?

With increasing competition amongst airports, airport managers have been looking at other ways to keep landing fees low to encourage passenger growth, and differentiate their passenger experience. The result is a transformation of the traditional aviation fee-based model. In the new paradigm, non-aeronautical revenues, such as retail, food and beverage, parking, and property are major contributors to an airport’s financial success.

“Aeronautical revenues are under pressure in nearly all airports, particularly at our European airports where non-aeronautical revenue is predominantly the main income for the airport,” says Sammy Patel, Manager, Commercial Development, Vantage Airport Group. “Passengers who have a great airport experience are more relaxed and tend to spend more. So, the customer’s needs have to be at the heart of everything we do, but we have to know every aspect of their needs in order to achieve this.”

However, for passengers, the primary purpose of visiting an airport is not shopping. In fact, research shows that most do not plan on buying anything.

“There can be tendency to focus on the commercial area which can be a great experience, but for the passenger to truly engage with the airport, the whole experience has to be great to ensure they remain positive and relaxed for them to be willing to spend time in the commercial areas,” continues Patel. “The key is to maximize dwell time in shops and develop a proactive response to customer needs.”

Vantage Airport Group, an industry-leading investor, developer and operator of airports, is experienced in planning and managing world-class terminals. Vantage believes that to best meet customers’ needs and wants, airports must know who they are.

The company has access to commercial data by scanning boarding passes in partner retail outlets, seeing which units they are visiting and the time spent in each using beacon technology, and holding personal information from online parking transactions. It is extremely valuable in understanding the total value of a passenger to the airport, and their purchasing behavior.

Given the average spend per passenger varies by destination, developing an understanding of the total commercial value of a passenger, taking account of both aeronautical and non-aeronautical revenue, can inform strategic route development: targeting new destinations and additional frequencies and improved operational decision-making, such as aircraft stand planning.

“Passengers will only engage with you if you present them something they need, want, or desire—or more importantly, something that is relevant to them” said Patel. “Ensuring we regularly profile our passengers allows us to build and change the commercial offer appropriately.”

At Larnaka International Airport in Cyprus, Vantage and its retail partners have learned that passengers flying to and from the UK tend to purchase tobacco and alcohol brands before departure, while Scandinavian passengers typically buy beauty and high end chocolate products. Different displays, which are mounted on wheels for easy maneuverability, are switched around according to the flight schedule to more prominently display products of greater interest.

Creating a fun and stress-free atmosphere, and removing barriers to spending, such as long lines, also help motivate shopping behaviour. Lynden Pindling International Airport in the Bahamas, for example, comes alive with music and children’s activities every Friday afternoon during the month of August when it hosts its Take Off Fridays event.

Finally, achieving success requires strong partnerships between airports and retailers. The airport cannot merely be a landlord. The best results come from working and reviewing performance together, generating customer satisfaction, with all parties reaping the benefits of increased passenger spending.