5 Levels of an Airport Revenue Strategy

Edward Wilson-Smythe

Airports can drive ancillary revenues by following five key levels of business innovation, as follows:

PassiveEdward - 5 Levels of an Airport Revenue Strategy Consumer Segmentation

• These services are based on a broad mapping of services to demographic/behavioral segments, and do not rely on significant technology innovation or information integration.
• There is limited targeting of services, with most consumption based on consumer choice, not proactive actions.

• Examples of these include premium restaurants, shopping, valet parking, expedited security lines, etc.

Consumer Push Based on Consumer Segmentation
• At this level, services are targeted to specific consumer segments based on demographic/behavioral factors, leveraging broad consumer data from sources such as airlines and frequent flyer programs.
• This enables airports to define services and target them to specific consumer segments, such as positioning of specific retail/restaurant properties, offers based on flight segments, etc.

Individualized Consumer Integration
• Based on additional information that is specific to each consumer, collected from additional information sources as well as location data, specific services/offers are targeted to consumers.
• Analytics are used to predict consumer behavior and then refine the predictions based on additional data on behavior patterns.
• These typically involve targeted offers for each consumer, impacting consumer behavior through incentives and information.

Passenger Flow Management
• With incentives and information having limited impact by themselves, more mature airports focus on driving consumer behavior through proactive management of passenger flows, and optimizing passenger time in conditions that maximize revenues.
• Typically, wait times between security and departure of between 30 and 45 minutes have the maximum yield, and airports can streamline operations based on flight data and passenger flows to expedite the time from arrival to security processing to optimize the productive wait times.
• These passenger flows require proactive management of airport operations using predictive analytics, and are combined with the strategies in level 3 to drive desired consumer behavior.

Operations Flow Management
• The most mature airports are able to modify flows beyond passengers, including dynamic gate assignment and location of retail and F&B operations to optimize revenues from passengers.
• This requires high level of information integration with airlines and retail/F&B concessions, and also analytics to predict and optimize the decisions with each new interaction.
• This also requires a high level of system and operational flexibility to support minimal lead times for changes in gate assignments, retail inventory mix, F&B options, etc.

5 Levels of Revenue Strategy Graphic 1030x424 - 5 Levels of an Airport Revenue Strategy

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