airport travelator
9 months ago
 

Airports must focus on digital services (and not airline customers) to make money

The best chance for airport owners to make money is on the “non-aeronautical side of the ledger”, according to a leading thinktank in the US.

The Boston Consulting Group argues that landing fees and other aviation-led revenues are often regulated, so airports must now find new ways of increasing income.

The organisation says:

“By smoothing passengers’ travels through the airport and improving their overall experience, airports can transform travel from a burden into a more pleasant and even surprisingly delightful experience.

“This is not simply a touchy-feely, nice-to-have option but increasingly a business necessity.”

Airports, of course, have been told for years that they should up their game when it comes to “improving the passenger experience”, but it is only in the past few years that many facilities have decided to act upon such guidance, driven in part by their ability now to tap into emerging technologies and the connected nature of modern passengers.

BCG says that every airport should be considering some kind of “digital transformation” exercise as a result of the changes in the consumer marketplace and availability of technology, especially that contained in mobile devices.

But the question for many airport operations is where should they start?

Airports, after all, are often mini-cities in their own right, with huge layers of complexity around security, logistics and the fact that thousands flow through the location every day.

Some work BCG did last year looked to identify some of the pain points that passengers experience when using an airport.

The following chart outlines the importance and satisfaction rates of airport users, based on a survey of 1,500 passengers from 56 countries:

bcg1

Breaking it down further, in terms of establishing what types of tools and technology can be used to help at specific pain points, BCG came up with the following table:

bcg2

BCG rightly raises the spectre of how does an airport get any of this strategy off the ground.

Management consultancy jargon, but it suggests five golden rules for any operator to consider:

  • See the big picture
  • Build and follow a business case
  • Over-invest in buy-in
  • Be open to innovation that is not invented here
  • Invest in people, not just technology

NB: Airport image via Shutterstock.

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Kevin May

About the Writer :: Kevin May

Kevin is senior editor and a co-founder at Tnooz. He was previously editor of UK-based magazine Travolution and web editor of Media Week UK from 2003 to 2005.

He has worked in regional newspapers (Essex Enquirer) and started his career at the Police Gazette at New Scotland Yard in London. He has a degree in criminology, a postgraduate diploma in magazine journalism and publishes his first book - a biography about Depeche Mode - in late-2016.

 

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  1. Lee Rainford

    This is definitely one of the areas where pre-book car parking has come in to help airports get ownership of that customer. We’ve helped a number of major airports begin to take transactions for car parking up front, turning their website and apps into an e-commerce platform. This in turn gives them valuable information in advance about the customer and allows them to begin a (digital) relationship with them. Through Wallet-based tools which can be used for the entry an airport can communicate with that customer throughout their airport experience and better understand the spend-per-passenger metric. It’s definitely a space that is growing.

     
    • Glenn Gruber

      @Lee, I can see the parking piece of it, but that’s only for your home airport. My hypothesis is that it’s generally not the home airport that befuddles the traveller. It’s the one they don’t know.

       
  2. Ian Kay

    @Glenn; You make some very interesting remarks and your own article offered a very thoughtful perspective. I agree that airport apps and those of airport related service providers may struggle for viewership against those of the airlines. Moreover I think a tipping point has been reached whereby the consumer is rendered impotent to make a sensible choice between the ocean of travel apps available all of which are offering roughly the same thing. However I think that airports should maintain a focus of ownership of the passenger as their customer rather than abrogate this to the airlines. Much has been written on this subject and there is enough in this to suggest that travellers want the airport journey to be a part of their holiday experience rather than an adjunct to it. If this is so then there is an onus on the airport operators to meet that need. I agree with you that this may not be achieved through the soulless anonymity of an app and definitely not by a robot, expert Bostonian opinion notwithstanding. But the fact that it is the airport operators and not the airlines that are installing bowling alleys, and cinemas, massage stations and sleep pods, free digital travel channels and cookery lessons suggests that they are taking this new responsibility seriously.

     
  3. Glenn Gruber

    @Mark: From a post I wrote a year ago: “But there’s one problem with focusing on passenger-facing apps—they’re pretty low on the download list. The number of downloads for airport apps pales in comparison to those of airlines, hotels and car rental agencies. The reason is pretty simple: travelers tend to fly or stay with the same suppliers over and over again, regardless of where they travel. And they use apps to manage those bookings.

    On the other hand, with the exception of their home airport, travelers don’t frequent other airports often enough to make downloading the app worth their while. The only airport they likely spend time in is their own. And if they travel a lot they will learn the ins-and-outs of their airport and have little need for even their own home-airport app.

    So if mobile airports best opportunity isn’t passengers, where should their focus be placed?”

    http://www.propelics.com/mobile-airports/

     
    • Mark Lenahan

      Thanks for that Glenn, it’s an interesting piece from April and I agree with what you wrote. Consumer (passenger) apps may not be the right CX investment for airports.

       
  4. Glenn Gruber

    This is why consulting companies get a bad name. Put out a report on a well known issue and suggest that Robots are the answer. OMFG. At least they didn’t charge $1M for this article.

     
  5. Mark Lenahan

    Does this refer to “The Connected Airport: The Time Is Now” article BCG published in Perspectives?

    I broadly agree that airports need to consider passengers as customers, but one issue is their relationship with the passenger is so short compared to the airline’s, even though it is crucial to the overall experience.

    I’m not sure I agree with the idea that airport (as opposed to airline) mobile apps are a “proven solution” though.

    Firstly, using the app stores – compare any airline’s app with their main hub’s app (e.g. BA and LHR) in terms of downloads, reviews, etc. in the app store. I’m seeing airline app adoption at between 3 times to 10 times better than airport apps. (Some airports incentivise app downloads with free wifi, e.g. CDG).

    Downloads are not the most important metric though. What is more worrying, according to eMarketer (quoting AppsFlyer), 30 days after downloading an average app only 3.3% of users are still active (3.2% for iOS users). If that’s the case for travel – which might be even worse – then active users are only a tiny fraction of downloads.

    Maybe the airport only cares about the next 2 hours – customers may uninstall and reinstall the app – but it’s going to lead to a strange digital engagement compared to a shopping mall.

    Not exactly scientific I know – I have my doubts about either the popularity or the stickiness of airport apps, and for that matter airport loyalty programs. I’d be happy to learn otherwise if I’m wrong.

     
 
 

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