As the airports of tomorrow gear up to meet passenger expectations, social change and technological evolution will change their ecosystem radically, predicts Amadeus in its new report.
You are stuck in a traffic jam, and will possibly miss your flight. But don't worry, the airport senses your plight (thanks perhaps to locational feeds from social media) and rebooks your flight automatically.
That's air travel for you in 2025. If that's too far away a scenario, then in three years' time, several airports might be offering door-to-door transport services for economy class passengers and they could be boarded and allocated seats according to the amount of hand baggage they have.
In the airport of the future, check-in baggage would any case have been collected from the passenger's home or hotel, and been checked in.
A new report ‘Reinventing the Airport Ecosystem' by travel technology firm Amadeus identifies the passenger pain points with today's airport experience, analyses social trends and the technological changes taking place. It points the way to how airports can reinvent themselves by 2025.
For starters, the airport of tomorrow, says the report, will shift focus from making money from airlines and start looking at other commercial revenue options. Ryan Ghee, Editor, Future TravelExperience, forecasts that passengers could contribute more revenue to airports.
Take the example of Munich airport. It has started eking revenue from not just passengers but also the city's residents. The Munich Airport Centre located between two terminals has thrown open its recreational and shopping facilities to the city's residents. Through a range of leisure activities, clever use of space and people flow, it has created a mini-city feel to attract local residents who view the airport as a destination by itself. So there are beach volleyball tournaments and mini golf at the airport, for instance.
Ankur Bhatia, Director, Amadeus India, says airports located far from the city – such as the Bangalore airport – could naturally leverage on this revenue potential as the traveller is captive. In cities such as Mumbai and Delhi, where the airport is in the heart of the city, the transit passenger could walk out and be back. On the other hand, says Bhatia, if the airport offers an immersive experience, then it can make the passenger stay put.
Dubai Airport and Singapore's Changi Airport have marketed their shopping experience so well that they have become preferred hubs. “At Dubai, a traveller won't mind a three-hour halt and in fact, looks forward to spending a few extra hours at the airport,” points Bhatia.
Shopping and more
For most airports, shopping is the low-hanging fruit to increase non-aeronautical revenue, points out the report. And the smart operators have cashed in well. Take Seoul's Incheon Airport, where the operator generates about 65 per cent of sales from shops, hotels and other businesses not directly related to flying. So much so that it has been able to offer a reduction in landing fees to airlines and attract them and passengers to airport.
Now the Incheon Airport operator is planning a $3-billion resort to attract Chinese tourists to the area. In 2011, Chinese and Japanese travellers accounted for 45 per cent of duty-free sales at Incheon. Now, it plans to provide medical centres, malls, entertainment facilities and luxury goods outlets to lure more Asian shoppers. Already, Incheon has surpassed Dubai and London Heathrow to become the world's biggest airport in terms of duty-free sales in 2011.
But there are other ways to grow non-aeronautical revenue as Changi, one of the most innovative airports in the world, has shown, says the report. Changi has also invested in providing a range of leisure and entertainment options such as themed gardens and nature trails, including the first airport Butterfly Garden. It also offers free Singapore city tours, movie theatres, gaming consoles, massages, interactive art zones, a 3D Electronics Zone, free local calls, over 500 Internet stations and airport-wide Wi-Fi.
The Time Factor
Increasing revenue per passenger is all very well. But this implies that people would need to spend more time in the airport environment. Do passengers really want to do that? After all, the report itself – which is based on a survey of global passengers as well as airport and airline personnel – shows that travellers seek speed, simplicity, convenience and reliability of completing core airline and airport processes.
Technological advances – especially in the mobile space, now that 85 per cent of the Earth's population receives mobile coverage – could aid this. Some of the developments that passengers said they would like to see include: remote check-in and bag collection, use of mobile phones to navigate all key touch points, frequent flyer cards as permanent boarding passes, and so on (see graphic below).
So isn't there a dichotomy here? On the one hand, airports want to offer an immersive experience to keep passengers glued to their premises; on the other hand, they want to make travel convenient and aid quick transfers.
Ankur Bhatia sees no contradiction here. There are all sorts of travellers, he points out. Leisure travellers might make the airport a destination itself, while the business traveller might like to get from point A to B rapidly, he says. He points out how Finn Air promotes Helsinki as an airport that provides great ease of transit through videos on YouTube.
The report also highlights the need for airports to look into passenger demographics to serve them better. “Size, geographic distribution, age profile and wealth of tomorrow's global population are critical to the airline industry and the airports that serve them,” it notes.
For instance, Asian travellers are on the rise. Currently, China has 0.3 seats per head for each of its 1.3 billion people, whilst India has only 0.1 seat per head for its 1.1 billion population. Should Asians ever travel at the same rate as US citizens, this could triple global passenger numbers.
The other big demographic segment are older travellers, who create personalisation challenges and opportunities for airports. “Insight into the age profile of target markets can help determine the service expectations, specialist needs and price sensitivity of potential travellers. By 2047 the UN projects that the number of older persons could exceed the number of children on the planet for the first time17,” notes the report.
Already, one Australian company, Air Travel Companion, is showing an example of such service personalisation, offering door-to-door transfer of an elderly person by a professional nurse.
As the report concludes, “Tomorrow's airport will be a complex environment with the passenger at its heart, collaboration as its lifeblood and innovation as its currency.”
For airports looking to scale up on non-aeronautical revenues, there are some lessons to learn from case studies such as Singapore's Changi Airport. Changi generated retail spending of $1.18 billion in 2011, a 17 per cent growth over 2010, thanks to shopper promotions and expansion of its retail offerings, points out the Amadeus report.
Given that shopping is clearly one of the simple ways for airports to earn revenue, what are the models that they can follow? Is luxury shopping – conventionally the most followed model by airports – the best way? The Amadeus report, which is based on an extensive global survey, shows that price is also a clear driver with 54 per cent of those surveyed saying that discount outlet stores would encourage them to shop more in the airport, against just 13 per cent who would like an expansion of the luxury offering.
Greater use of sales, discounts, best price guarantees and early-shopper incentives were also popular (46 per cent).
Over a third of respondents were attracted to the notion of buying in the air and picking up on the ground. Locally-themed airport retail offerings too found good offtake (42 per cent).
Clearly, it's up to the airport to come up with ways to make travellers part with their discretionary spending at the airport rather than elsewhere.