How to increase airport revenue: a look at innovative solutions & new technology
The Covid-19 pandemic has had a seismic impact on the aviation industry. Since the outbreak, European airports have lost an estimated $83.5 billion, with the effects still being reverberating today. And while we’ve seen an upward trend in airport traffic in the last months, increasing uncertainty about the global pandemic situation means that progress will be slow for the foreseeable future.
In light of this development, airport managers are facing one top priority: how to increase airport revenue heading into 2022. This article aims to answer exactly that, looking at the new approaches and technologies airports can leverage to optimize revenue, reduce costs and reshape the customer experience.
How to increase airport revenue in the pre-travel phase
Getting passengers to invest in services before they arrive at the airport is crucial. Pre-ordering and pre-booking strategies have been implemented across hospitality and retail sectors for many years. And while the aviation industry has engaged pre-travel revenue, there’s now an opportunity to take things to the next level.
With an increased emphasis on safety, security and organization, Airports can capitalise by offering passengers useful data and information to help them plan their journey.
Attract new routes with Dynamic MCTs & virtual interlining
Through the implementation of dynamic MCTs, with intelligent and seamless MCT calculations that come with advanced gate prediction algorithms, airports can pinpoint layover times and baggage through check-in precise detail. Providing this data to airlines, and showcasing the airports efficiency as a transfer hub, helps them make better decisions and increases opportunities for new business.
Airports can also adopt virtual interlining systems to further improve their attractiveness as a suitable layover hub. This offers two advantages: Firstly, they can provide automatic baggage through-check technology for flights where no interline or alliance agreements are in place. Secondly, it enables airport connection guarantees to ensure passengers are rebooked in case they miss their flight due to disruptions.
The combination of dynamic MCTs and virtual interlining technology means airports can grow aeronautical revenue, by increasing routes and airline partnerships, and passenger related revenues, thanks to more traffic and better experience.
Online booking services
Airports can implement more online booking services to increase pre-travel revenue. Passengers are already well-accustomed to buying tickets using search engines and online travel agents (OTAs). In fact, OTAs have captured 40% of the global market, including hotels, airlines, packaged tours, rail travel and cruises, and the global online travel booking industry is now worth $517.8 billion.
All this speaks of incredible sell-on potential. Enabling passengers to book everything in one place – such as parking, VIP lounges, priority boarding, hotels, porter-services and reduced-mobility assistance – is essential to drive up that pre-airport revenue.
How to increase onsite airport revenue
We know that passengers are key to recovery. The Netherlands Airport Consultants (NACO) report states that almost 90% of airport revenues are passenger related. Meanwhile, a 1% increase in passenger satisfaction leads to 1.5% growth. So, it stands to reason that building an extra level of empathy for passengers, while genuinely understanding and acting on their concerns, will have a profound impact on airport revenue.
At a time of uncertainty and instability, earning the trust and confidence of passengers means going beyond standard regulations. By putting the customer front and centre, airports have the chance to construct consistent solutions throughout the travel chain.
Here are some tools, technologies and systems that airports can implement to increase onsite revenue.
Standardised maps and data
Airports can take advantage of new technologies to provide passengers with precise gate-to-gate predictions, along with standardised onsite maps integrated with flight schedules, passenger itineraries and operational data. This all serves to provide passengers with added control over their journey, instilling a peace of mind that enables them to relax and enjoy the airport services on offer.
Having the right software and automated processes in place can also bring a much-needed simplicity to luggage through-checks, even when an interline and or alliance agreement doesn't exist. Airsiders’ collaboration with BEUMER Group – a global leader in baggage handling systems – makes all this possible. All this leads to an improved self-connecting passenger experience. This means more airport passenger traffic and happier customers which, ultimately, translates to increased revenue and customer loyalty.
Cut the queues with cutting edge tech
A large part of maximizing the passenger experience is reducing waiting times. Airports can implement AI-based deep learning technology in the form of video analytics software, to increase situational awareness, predict passenger volume and optimise airport traffic flow.
Video analytics data visualisations can track the number of passengers who travel through an airport or terminal for any length of time. This technology can also be used to maximise safety – key to avoiding bottlenecks and overcrowding during times of Covid-19 restrictions – while ensuring the streamlining of security checks, passport control, Covid-19 digital passport checks and visa control, etc. Ultimately, cutting down on passengers’ waiting or queuing time drives on-site airport revenues since they have more free time to relax, shop or eat.
In order to provide a first-rate passenger experience, airports must zero in on exactly who their passengers are. Airports can use data, such as video analytics data, to not only figure out how to make use of terminal space with maximum efficiency, but to also enable an understanding of customer habits and behaviours - whether visiting retail stores, restaurants, VIP lounges or any other part of the airport.
Airports can also carry out passenger profiling by using survey data. This enables retailers to position the right kind of products in the right spaces, bringing a more personalised experience for passengers, while boosting revenues and building a loyal, long-term relationship between the traveller and the airport.
Making use of advertising space
While online ad space is now the dominant form of advertising, there are still plenty of ways to engage customers within the physical space. And, with plenty of space available to airports, creative use of advertising within the airport is a very effective way to increase revenue.
With a subtle advertising strategy that harmonises the aesthetic themes of the airport with the advertising space, airports can offer sponsors excellent opportunities to advertise their products, while engaging passengers with products that are relevant to them.
Within the context of the all-round improvement of the passenger experience, customers will be in a relaxed mindset, making them open to compelling messages. Plus, with less queuing time and more dwelling time in which to relax, the advertising space takes on more value.
Wooden benches could be engraved with logos, seats in gates areas could have upholstered advertising, waste and recycling bins could advertise new retail spaces within the airport and giant digital video screens and lightbox static ads could adorn wallspace.
Airports could even showcase their advertising potential to sponsors with a VR tour, just like Sydney Airport’s advertisers did, leading to an increase in retail and ad revenue despite an overall drop in passenger traffic.
Optimize car park occupancy
Dynamic pricing models for airport car parks are a great way to optimize occupancy and maximize revenue for airports. In fact, these models work similar to the ones deployed by Uber and Lyft, who enjoyed rapid success on the back of this exact strategy. Concerns about detrimental effects on passenger experience are legitimate, but can easily be circumvented with appropriate planning and implementation. Particular emphasis must be thus placed on customer research to establish a model and boundaries that prevent excessive and numerous price fluctuations for passengers.
What’s more, if implemented with care and combined with new technology, airports can actually improve the overall passenger experience when introducing dynamic pricing models. For instance, implementing an intuitive app that showed parking space availability in real-time would be a particularly useful customer-first feature, as would an increase in the number of payment options, including mobile pre-payments for parking spaces.
Another important tool for improving airport revenues is peer airport benchmarking. It allows hubs to compare and contrast their on-site performance with that of other peer airports. By using comprehensive data collection and analytics, airports can thus zero in on core competencies and areas of improvement. This leads to an increased understanding of pain points, a clearer strategy for modernising and innovating, and an all-round increase in revenue and cost-efficiency.
Technology and innovation: the key drivers of airport revenue
In a post-pandemic world, airports need to look to new concepts to not only recover revenues lost since the beginning of 2020 but to go beyond. Tapping into new technologies is crucial – in terms of cutting costs and unlocking new revenue streams, but also when it comes to creating a safe, relaxing, compelling experience for the modern traveller.
By genuinely focussing on the needs of passengers and being open to new approaches and breakthrough technologies, airports can see significant revenue growth, while catering for all stakeholders across the value chain.
Airsiders helps airports boost revenues by taking the leap to the new age of travel, providing cutting-edge solutions for virtual interlining as well as airports data and maps.
To find out how our solutions can help your airport increase revenues, contact our experts here.