Adapting to Changing Passenger Behaviour Post-COVID19: Impact on Airport Non-Aeronautical Revenue

Omoh Anna Ohiomoba


August 5, 2020

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COVID-19 has altered life as we knew it! Indoors is the new outdoors, home is the new office, the cyberspace is the new conference room and the airport industry as we knew it has been changed forever. Over the years, service quality in the airport industry has been a critical tool in measuring efficient operations with the desire to achieve improved customer satisfaction. Studies have shown that passenger satisfaction has a direct effect on their spending behaviour. A happy customer is a buying customer… a tale most airports can only dream of, considering the effect the pandemic has had on airport retail business, crippling its Non-Aeronautical Revenues (NAR). Source: ACI Economic Survey, 2018 As the graph illustrates, the NAR is much more diverse than the aeronautical revenue and accounts for a significant proportion of an airport’s income statement and of its resulting bottom line. Major sources of airport NAR include retail, terminal rent and leases, concessions and advertising, which make up an average of 40% of an airport’s revenue. A research paper based on the analysis of the Airports Council International (ACI) Airports Service Quality (ASQ) annual global survey of more than 550,000 passengers carried out at over 300 airports across the world found that “an increase of 1% in the global passenger satisfaction mean (as defined in the ASQ Survey) generates, on average, a growth of NAR of 1.5%. Source: The ASQ Barometer, Q1 2020, ACI In these difficult times where airports have experienced on average, a 95% loss in business operations, what role does customer experience and satisfaction play in establishing customer trust and confidence thereby influencing their purchasing behaviour to support an airport’s NAR? The advent of the pandemic has brought a different set of expectations for travellers which presents a new world of airport operational challenges. In responding to the promise to keep airport users safe, airports are obligated to undertake certain safety precautions to limit the spread of COVID-19 (coronavirus). The new reality poses ample scenarios for distorted and prolonged facilitation which can lead to passenger agitation and less shopping time. If the analysis we have established suggesting that customer satisfaction has a direct relationship with airport NAR, is it safe to conclude that airports are facing even harder times with respect to their commercial revenues? And there might be little hope for airport retail and commercial partners to resume viable operations? A recent survey conducted by m1nd-set reports that around 60% of travellers will not visit the shops when at the airport, a quarter of these because of the Coronavirus while the other 75% indicated that they would not visit the shops, but not because of the virus. Undoubtedly, many airports will require assistance from Governments to remain operational, however most commercial businesses at airports will be unable to remain open in the short and medium term due to travellers’ unwillingness to shop. Automation of the retail space promoting contactless operations will encourage shopping as reported in the survey conducted by M1nd-set highlighting the “top 10 travellers’ most-wanted innovations for a more engaging post-covid-19 airport shopping experience” – the top three responses were:

  • 84% of travellers – App and QR Code on smartphone to find out more about a product/brand and for final payment,
  • 80% of travellers – Robot/machine which sprays fragrances when both the brand and product names are requested and correctly pronounced, and:
  • 78% of travellers – Digital screen displaying an ongoing trailer about brand/product’s history, origin, ingredients, usages etc.

Clearly, this is an indication that digitization in the airport retail space will play an important role in restoring some sense of passenger confidence hence improving passenger satisfaction. The historic case for airport performance management resulting in improved service quality and its direct relationship with traveller’s spending behaviour does not hold much in present times. Ultimately, there is hope that an airport’s health and safety protection measures can have a direct positive relationship on passenger’s spending behaviour, supporting non-aeronautical revenue. For many airport users, contactless digital facilities are the new performance management criteria for passenger experience satisfaction. Digitalization is key!