Reinventing non-aeronautical revenues in a crisis

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It’s a sad indicator of the scale and nature of the current Covid-19 crisis that the ubiquitous phrase ‘new normal’ no longer works; the climate is so fragmented and evolving so rapidly that no semblance of ‘normal’ looks likely within the next two to five years. Most airports face existence-level threats to their finances and operations, with traffic and revenue forecasts in tatters and millions of aviation jobs threatened worldwide. 

The longer-term implications for most airports are exacerbated by a perfect storm of collapsed traffic, growing pressures on traditional retail and concession models and, most critically, a rapid and radical shift in customer needs, mindsets and behavior in response to the crisis.

This unprecedented scenario demands new levels of agile responsiveness from airports – at precisely the weakest position in their history. But there is a path out of this.

The online shift

Travelers will return. We still don’t know how many or when, but we do know how they are thinking and how their behavior is evolving. During lockdown, consumers across all demographics have surged to online options
in everything from home working to groceries to luxury goods. 

This digitally enabled behavior is increasingly embedded and clearly threatens the traditional airport retail model. Even when they return to the terminals, digitally savvy travelers may retreat to the perceived safety of their electronic ‘cocoons’, spending still more time on their mobile devices than in the airport stores. 

Travelers’ increasing reliance on electronic devices means airports should adapt to reach them digitally and be ready with new approaches to optimize non-aeronautical revenues (NAR) from reduced traffic, addressing the clear shift in customer behavior and needs.

Consumers’ digital escapes 

We all know the future is digital, but airports’ digital planning has primarily focused around the need to move processes off-airport, advanced processing technology and the use of real-time data for interactive decision making. 

From digital identity management to hygiene robotics, digitization has been cited by almost every industry body to address the new realities of air travel – but its role in driving a stronger, more stable stream of NAR is often overlooked or misunderstood. Currently, the European Travel Retail Council and ACI Europe are campaigning for Arrivals Duty/Tax Free shopping rights for EU airports, but this simply expands the existing challenged model; it does nothing to address the evolution in customer behavior.

A digital response for airports

The revenue recovery begins by reinventing airports’ traditional, siloed commercial and operational models. By switching to this new digital window the airport is able to instantly engage more strongly and more frequently with travelers at every step in their journey, including the crucial pre-travel phase, rapidly developing its online audience. Smartly complementing the airport store experience, this new digital footfall also helps drive physical footfall too.

Addressing customer needs, the omnichannel platform enables a dramatic expansion of customer choice across product categories and services, strengthening the differentiation of the airport offer. Digital capabilities range in complexity from a core platform offering ‘touchless’ Reserve & Collect service to a more comprehensive encounter that builds even deeper personalization, communication and flexibility within a sophisticated ‘anything, anytime, anywhere’ experience.

Underpinning the experience is a range of key fulfillment capabilities that address the customer’s need for flexibility; from collection point pickup to delivery to the point and time of their choice, a demand hugely intensified by Covid living. The result is a distinctive, seamless, differentiated airport experience that can meet the rising challenge of online brands and retailers.

Adapt and thrive

Incremental revenue has never been so vital as in the year ahead. Digitization and e-commerce don’t pretend to solve every problem in the traditional revenue model but do provide proven tools to drive conversion, upsell and cross-sell significantly above in-store performance, mitigating the likely continuing disruption to traffic levels.  The Covid-driven surge in online behavior will not ebb when traffic returns, potentially leaving those airports still reliant on the single physical channel of footfall into the stores even more deeply exposed as they try to drive conversion from a lower traffic base.

As passengers return, airports need to be talking their language on the platforms they trust, and giving them the experiences they demand. Put simply, redefining the customer experience redefines the NAR opportunities.

The pioneering airports and airlines that have adopted digital paths over the past five years have learned that strategy and actually maintained some degree of revenue and customer conversation throughout the current crisis – and are better positioned for when the next one strikes.  

Despite the unique aspects of this appalling crisis, the commercial reality for airports remains the same as in any challenge – it will reward those who best adapt and innovate. Customers have already adapted digitally at an unprecedented speed; airports still have the opportunity to do the same. 

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About Author

Kian Gould is founder and CEO of AOE, one of the leading global omnichannel e-commerce and digital transformation experts within the open-source space

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