Data suggests airports are wasting their time with mobile apps

Airports are spending a significant portion of their marketing budgets on customer engagement tools, including a sizable investment in developing mobile applications. By 2018, about 80% of airports will have implemented mobile apps as a means to directly engage with passengers, according to the 2015 SITA Airport IT Trends Survey.

NB: This is a viewpoint from Cormac Corrigan and Mark Lenahan, independent advisors to airports, airlines, retailers, and loyalty programs.

To understand the investment in mobile, we compared mobile app downloads for a selection of the world’s largest airlines and airports. What we found is that, when we accounted for size (by passenger volume), airline apps were downloaded 14 times more often than airport apps.

Anecdotal evidence, personal usage, and experience in other verticals, such as retail, all suggested to us that airline mobile apps would be more heavily used than their airport counterparts. But what surprised us is that the gulf is much wider than we expected.

  • Amongst 25 of the world’s largest airlines, the app download estimate is around 117 million downloads, compared with 1.5 billion passengers carried annually.
  • However, amongst 25 of the world’s largest airports, the download rate was 7.2 million downloads, against a passenger base of 1.3 billion passengers.

The publicly available data is limited, and only allows for rough analysis. But this is an order of magnitude difference between airports and airlines.

To be fair, it would be a mistake to read too much into the ratio of downloads to passengers. Passenger numbers are not unique people, each passenger is counted every time he or she boards a plane or traverses an airport, so every return journey counts one person at least twice—both on the plane and at each airport.

Meanwhile, an app installed once may remain present for the entire trip or multiple trips.

Here, we are using download numbers to compare airlines’ and airports’ abilities to publish apps, but downloads are a poor metric for customer engagement.

According to an October 2015 study by AppsFlyer, reported by eMarketer, only 3.3% of users are still active 30 days after installing an app. This was based on 450 million installs of e-commerce, travel, and utility apps (but excluding games and social media apps).

airport apps

Why is this important?

For many airports in recent years, aeronautical revenue (fees charged to airlines) has either been static or in decline, when compared with passenger numbers, while revenue from retailing and other commercial activities (products and services provided to passengers) has grown significantly.

For example, Changi Airport Group’s 2015 report shows only 0.2% growth in passenger numbers, while aeronautical revenues contracted by 3.6%. However, “airport concessions and retail income” grew by 7%.

Another recent example, Heathrow (SP) Limited’s 2015 annual report, shows that aeronautical revenues grew only 1%, compared with a 2.2% growth in passengers, yet retail revenues grew by 8.4% during the same period. Industry-wide, non-aeronautical revenues now contribute close to half of total airport revenues.

airport apps

Future shock

A significant share of the business case for airport mobile development rests on the perceived need for airports to better engage with passengers directly. By that metric, we feel that investment in consumer mobile apps may be a waste of resources for airports and offer poor return-on-investment, relative to other mobile initiatives.

Customer engagement and passenger experience can be vastly improved with other types of mobile technology. Some examples include:

  • mobile enabled (responsive) airport websites
  • enterprise apps used by operational or customer facing staff
  • devices placed in retail outlets and restaurants.

Likewise, wifi and beacons can be used to improve the passenger experience considerably, whether or not the official airport app is installed on the passenger’s mobile device.

The big challenge for airports is that, as a passenger, you are essentially anonymous to the airport. The airlines and/or agencies know all about your itinerary, but airports do not.

Another issue: The time spent in the airport is relatively short, at least when viewed from the perspective of the full end-to-end customer journey. Airlines already have a strong and established relationship with passengers in the pre-travel, airport, and flight journey phases. They are positioning themselves as the trusted source of essential information and travel products related to the entire passenger journey, including at destination.

Just because mobile isn’t working doesn’t mean that direct customer engagement cannot be achieved. But we think airports need to reconsider how they go about it.

Airports already recognise they need much better collaboration with other partners in the travel journey. These partners include the airlines, the alliances, travel agencies, and loyalty and frequent flyer programs. Many of these stakeholders have a longer and deeper relationship with the customer.

Airlines and other partners need to facilitate airport involvement in their personalised communications with passengers. This will not only open new ancillary revenue opportunities but also have a significant positive impact on the end-to-end customer experience.

NB: This is a viewpoint from Cormac Corrigan and Mark Lenahan, independent advisors to airports, airlines, retailers, and loyalty programs.

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About the Writer :: Viewpoints

A founding principle of tnooz was a diversity of viewpoints from across the spectrum. Viewpoints are articles by guest contributors from around the travel and hospitality industries. The views expressed are the views and opinions of the author and do not reflect or represent the views of his employer, tnooz, its writers, or partners.

 

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  1. Stephan Uhrenbacher

    Gentlemen,
    this is a great article pulling together many relevant facts. It is obvious that airports need to get connected to their customers, and it is also clear that the innovators, the large hubs who did already invest significantly into their own apps in the past 3 years did not get the user retention they hoped for.

    What is also evolving and not covered in the app is Flio as “the app for all airports” and in reality a location based commerce framework that is accessible at no upfront investment to airports, retailers and brands.

    As a snapshot in early 2016, we see three groups of airports:
    (1) One group of smaller airports are continuing to buy or build their airport apps. There are very good tech providers out there, but nobody can answer the question why an end user should download an app that is useful only at one airport.

    (2) A tiny group of “innovators” who now move on to commerce in FB messenger. Having internally written off their apps, they are now happy to invest on messenger commerce. Probably with more likelyhood of success but with a steep learning curve ahead of them.

    (3) the realists. The big hubs we spoke to who have invested first in their own apps, now move to an open data structure, where they want to make sure that their data is represented correctly in all channels, and on the other hand they demand passenger data in return and a way to sell to them when they come through and before they land. Flio will cater to all their needs and all their channel requirements.

    Stephan Uhrenbacher, CEO Flio.

     
    • Mark Lenahan

      Interesting observations Stephen, and I had a look at Flio and it looks good, I’ll certainly try it out on my next trip.

      On your third point…

      I agree that one way of addressing airport to passenger engagement is opening up more data and APIs. There also needs to be an economic benefit for that to happen, such as retail sales. In the long run, improved customer experience, and better use of limited resources are also economic benefits.

      I’m not entirely convinced that new intermediates between airports and passengers are the right answer. I think the passenger relationship already exists within airlines, agencies, frequent flyer programs, alliances, lounge networks, etc. One app for all airports is still going to compete with airlines and the other channels for customer attention. I think it’s an interesting idea though.

       
  2. Ian Malone

    Interesting viewpoint and in many ways I couldn’t agree more but also I couldn’t agree less. You are correct in assuming that it’s difficult for airports to drive downloads of an app when the use is potential so infrequent. And it makes sense that the end-to-end journey is owned not by the airport or even the airline but by a third party such as City Mapper or a travel operator. And it’s fair to say that 80% of the engagement seen on a mobile device is likely to be with social networks. But that is only correct for the current format for apps.
    Today, apps are stand-alone experiences. The user has to actively decide to use them from the homescreen. Tomorrow, the home-screen will be less relevant. Instead there is going to be a steady, Facebook-like stream of relevant content delivered straight to the lock-screen, pulled out of the installed apps by the operating system. It’s already possible on Android. As soon as Apple deliver it with iOS, the market for apps changes significantly, as apps will be the delivery mechanism to get content into that stream. Apple will do this as they see it will reduce the stranglehold Facebook currently has over mobile revenue and it will create a fairer playing field for the app ecosystem.
    The airlines and airports will then be fighting each other for the duty free and F&B spend. Airlines will be busy trying to convince the flyer that their onboard offering is better (good luck with that). Airports will have to have an app so that they can deliver the non-flight info such as security wait times, baggage drop off and departure gate info that drives passengers into the high-spend Airside areas (delivered by browsers, you have to wait for the passenger to pull the information. This is the single biggest oversight by mobile planners that fail to harness the power of apps’ push capabilities). As an aside, for the forseeable future, beacons will only work with iOS devices through apps (only Chrome works with beacons at the moment and as developers we don’t see anything in Apple’s previous behaviour that will see them want to do anything outside of their walled garden apps). However beacons are only one, quite fallible tech, something new is coming along soon.
    There is another reason why airports are investing in and will continue to invest in location-aware apps – the data produced as the passenger moves around the airport. Data that’s valuable for operations planning and much cheaper than using video and surveys and way more accurate and usable than wi-fi.
    I think one of the writers is ex-SITA? Interestingly they presented the airport app of the future at PTE in Cologne – a vision of guide-to-gate, aisle specific deals, destination content and more. It would be possible, but far from frictionless to deliver that via the browser.
    Airports are waking up to the fact that they need to own the digital relationship within their own airports. But it’s the stream, the ‘my feed’ if you will, that will provide it, as the apps the passenger has on board push the relevant content and info into it.

     
    • cormac corrigan

      Thanks Ian, appreciate your thoughtful insights. The key point we’re trying to make here is that its not so much about the tech and what it does (or will do in the future), its about the fundamentals of the relationship. There are a number of challenges for airports; the airport stage represents such a small percentage of the passenger e2e journey, core relationships are already established long before the passenger gets to the airport, and passengers, like consumers in other verticals, have limited appetite for app engagement. (Forrester 2015 Mobile in Retail Study found that 60% of consumers had 2 or fewer apps). Whatever the airport app ambition is, it needs to figure out what drives passengers to care enough to engage.

       
      • Ian Malone

        Hi Cormac
        So we looked at it the other way round and thought, as a passenger, what am I looking for? When your average passenger walks into the airport they have some key questions: Where do I check-in my baggage, how long will it take to get through security today, what are the food options after security and so on. These are deep-rooted pain points for the passenger that an e2e provider wouldn’t really be expected to deliver. So that leaves the airline (who currently own the digital relationship with the passenger, having issued the BC) and the airport itself. As I previously mentioned, there is a battle for ownership for the customer at this point as each organisation tries to commercialise the flight experience. Agreed, it’s not really an app that the consumer is looking for at this point, but the information – as long as they see it somehow. From my previous comment, this will be new the home-screen feed replacing Facebook as the place you hang out with all of your mobile content. I think the big point is that the airport needs to realise they are going to need to make the data available to the consumer and that, in my opinion, that will need to be pushed automatically, airports being such confusing spaces that’s it’s good to have a holding hand through the building.

         
        • Paul Brugger

          They are already Ian, well some are. Take a look at @LCYFlightInfo, @DXBupdates or @MELFlights. Real-time info direct to the passengers phone/feed via social. DXB push Costa Coffee offers. Real-time security wait times will be coming soon but technically possible if the airport has the data and can access it. Some are just more progressive than others and prioritise this function. For other airports they have more pressing priorities.

           
  3. cormac corrigan

    Paul, I think your view, “use platforms passengers are already on”, makes a huge amount of sense and aligns with expert observations from other verticals such as retail. Forrester, in a recent study commissioned by RetailmeNot, concluded, “retailers must expand their sphere of mobile influence beyond just the app and mobile
    website…. engage with customers where they already are, and in the context of what they are already doing”.

     
  4. Paul

    Some interesting points and the “barrier to entry/download” was a theme at the recent Passenger Terminal Conference. Personally for me, it makes sense to use platforms passengers are already on (such as social) which require no download as they are typically pre-installed on smartphones.

    This article may be of interest Cormac, Mark. Showing how some airports are proving passengers with 100% interaction: http://www.twittairport.com/web/#report

    Note: It is an independent article but I am quoted.

     
    • Mark Lenahan

      Thanks Paul.

      I wasn’t in PTC / Cologne this year but Cormac was. He might comment.

      Interesting piece on airport Twitter accounts.

      “Go where the customer is” gets a lot of lip service but running counter that is the gut instinct of some brand managers to create and control their own space. I think taking the later approach exclusively is a big mistake. Twitter, Facebook, Google (search and Maps) – are examples of where the customer is – these are the apps with high interaction on mobile and where you need to be.

       
      • Paul

        I spent the majority of my time in the Tech presentations. AMS are doing well in terms of app downloads, it was either 2M or 4M (sorry don’t recall) but numerous other large airports had 20K or 30K – and that’s downloads not active users.

        Twitter, Facebook, Google also don’t need to be downloaded as there is typically already app pre-downloaded onto smart phones these days – a big plus in my opinion, and as you say “where the csutomer is”.

         
  5. Glenn Gruber

    Cormac and Mark, couldn’t agree more. Much more opportunity for operational uses of mobile at airports, rather than customer engagement. See my post from last year for more… http://www.propelics.com/mobile-airports/

     
    • Mark Lenahan

      Glen,
      That’s a good post – and I should have read it earlier!

      I mostly agree about the reasons (home airport, etc.) – but I think there are other issues, around utility, also. (Hard to confirm that without extensive polling and/or in app analytics.)

      What you say about enterprise mobile dev makes a lot of sense. But Cormac and I are going to try and focus on customer engagement. While we think apps (as they are now) might not be the answer, we don’t think airports should give up on talking to passengers. Pestering passengers won’t work either. A situation where every single party tries to compete for attention at every stage, to “own” the customer relationship exclusively, will just result in an awful experience.

      Thanks for your comment,
      Mark

       
 
 

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