US airports seek to pump up revenue
Airports fund their basic operating costs and infrastructure improvements out of the money they charge airlines to land, passengers to fly and stores to lease space.
By Agencies |
NEW YORK: If you’ve done any travelling lately, you’ve likely noticed that many airports are looking more like malls.
“I was kind of surprised to see jewellry here,” said Jackie Steven of Aberdeen, Scotland, while doing a little pre-flight shopping at Newark Liberty International Airport one recent afternoon. “You don’t expect jewellry.”
But jewellry is just one of the many new retail offerings popping up in US airports. Flyers are as likely to find a Brooks Brothers or Victoria’s Secret as an overpriced doughnut cart. Weary road warriors can spend layovers in a spa as well as a bar. And if you forget something for the kids, your choices are no longer limited to a few racks of marked-up gift store knickknacks — name-brand toy stores are cropping up in terminals nationwide.
Airports fund their basic operating costs and infrastructure improvements out of the money they charge airlines to land, passengers to fly and stores to lease space. In addition to paying for labour and construction, airports have had to improve security procedures and accommodate more travellers for longer periods of time since the 9/11 terrorist attacks.
Airports have responded by improving their retail and restaurant offerings to add revenue and meet the needs of passengers. Some airport operators believe their mix of shops and eateries gives them a competitive advantage over other airports. Gone indeed are the days when air travellers’ shopping and eating choices were few and overpriced. Many airports have gone so far as to implement ‘street pricing’ policies, in which stores are required to charge no more for goods sold in the airport than they charge elsewhere.
“All of a sudden, any airport can be a retail opportunity,” said Bob Mann, an airline consultant based in Port Washington, New York. “It really has turned into a very different environment than it was 10 or 20 years ago.”
Airports need money to fund operations, and have big, spread-out buildings. Leasing out some of that space for retail is a revenue opportunity with little downside for airport operators. “What’s important about airport traffic is the volume of travellers,” said Daniel Butler, vice-president of merchandising and retail operations at the National Retail Federation. “It’s new traffic every day.” The number and variety of airport retail offerings has been growing for years, experts say, part of a slow evolution in the way airports think about serving passengers, and raising revenue. But it really took off after 9/11; with travellers urged to arrive more than two hours before flights to clear security, the captive audience in the terminals shot up.
“It has expanded with the (Transportation Safety Administration)-mandated early arrival at airports,” Mann said. “Since 9/11, people are spending more time at airports,” said Brian Lassaline, a spokesman for Detroit Metropolitan Wayne County Airport.
Overall statistics on retail growth at airports are difficult to come by, but at just the three New York area airports operated by The Port Authority of New York and New Jersey, retail space grew by 7% from 2004-2006 to 4,32,000 sq ft. But are people about to board a crowded plane really willing to stop and buy things they then have to carry on with them? “They’re actually willing to do so more often than you’d think,” said Brett McAllister, senior vice-president of operations and chief financial officer at Airports Council International, a trade group.
“I was kind of surprised to see jewellry here,” said Jackie Steven of Aberdeen, Scotland, while doing a little pre-flight shopping at Newark Liberty International Airport one recent afternoon. “You don’t expect jewellry.”
But jewellry is just one of the many new retail offerings popping up in US airports. Flyers are as likely to find a Brooks Brothers or Victoria’s Secret as an overpriced doughnut cart. Weary road warriors can spend layovers in a spa as well as a bar. And if you forget something for the kids, your choices are no longer limited to a few racks of marked-up gift store knickknacks — name-brand toy stores are cropping up in terminals nationwide.
Airports fund their basic operating costs and infrastructure improvements out of the money they charge airlines to land, passengers to fly and stores to lease space. In addition to paying for labour and construction, airports have had to improve security procedures and accommodate more travellers for longer periods of time since the 9/11 terrorist attacks.
Airports have responded by improving their retail and restaurant offerings to add revenue and meet the needs of passengers. Some airport operators believe their mix of shops and eateries gives them a competitive advantage over other airports. Gone indeed are the days when air travellers’ shopping and eating choices were few and overpriced. Many airports have gone so far as to implement ‘street pricing’ policies, in which stores are required to charge no more for goods sold in the airport than they charge elsewhere.
“All of a sudden, any airport can be a retail opportunity,” said Bob Mann, an airline consultant based in Port Washington, New York. “It really has turned into a very different environment than it was 10 or 20 years ago.”
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On its face, the idea of putting stores usually found in malls in airports is a no-brainer. Retailers like to locate stores in places where there are lots of people, and airports offer a constantly changing, captive audience. For instance, 107 million passengers are expected to visit the three New York area airports this year. Airports need money to fund operations, and have big, spread-out buildings. Leasing out some of that space for retail is a revenue opportunity with little downside for airport operators. “What’s important about airport traffic is the volume of travellers,” said Daniel Butler, vice-president of merchandising and retail operations at the National Retail Federation. “It’s new traffic every day.” The number and variety of airport retail offerings has been growing for years, experts say, part of a slow evolution in the way airports think about serving passengers, and raising revenue. But it really took off after 9/11; with travellers urged to arrive more than two hours before flights to clear security, the captive audience in the terminals shot up.
“It has expanded with the (Transportation Safety Administration)-mandated early arrival at airports,” Mann said. “Since 9/11, people are spending more time at airports,” said Brian Lassaline, a spokesman for Detroit Metropolitan Wayne County Airport.
Overall statistics on retail growth at airports are difficult to come by, but at just the three New York area airports operated by The Port Authority of New York and New Jersey, retail space grew by 7% from 2004-2006 to 4,32,000 sq ft. But are people about to board a crowded plane really willing to stop and buy things they then have to carry on with them? “They’re actually willing to do so more often than you’d think,” said Brett McAllister, senior vice-president of operations and chief financial officer at Airports Council International, a trade group.
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