Many airports worldwide are taking big steps to appease passengers’ inner shopper. Aviation hubs such as London Heathrow, Singapore Changi and Hong Kong International now offer a staggering array of retail, food and beverage options.
A report published last year by Airports Council International revealed that non-aeronautical cash sources continued to constitute 40% of global airport revenues and had reached an industry value of $60.4bn.
However, some airports are beginning to recognise a frustrating passenger demographic the media likes to call ‘gate huggers’: lounge-shy travellers who tend to walk straight to their boarding gate rather than explore the retail playground of the departure lounge.
On the face of it, passengers that refuse to be swayed by duty-free mega-zones present a potential loss for airports and retailers. But could they provide an incentive for new retail opportunities at boarding gates?
The causes of gate hugging
The ‘gate hugging’ trend can be put down to a number of different factors, says Chris van Rÿswÿck, associate director of Pragma Consulting and a former commercial performance manager at London Gatwick Airport. At the top of his list are nervous fliers, who may be concerned about missing their flight and therefore tend to hover near gates.
The rise of low-cost-carriers (LCCs), such as Ryanair, could also amplify these concerns. As LCCs often lock aircraft hold space behind a paywall, many passengers only carry hand baggage and know that arriving late could result in their bags being stowed in the hold.
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By GlobalDataOther passengers may simply lack an interest in airport retail or want to get away from the hustle and bustle of departure lounges. This, Van Rÿswÿck says, is something many modern-day airport departure lounges don’t always accommodate for.
“Many airports provide very limited passenger seating and passengers who want to sit down know there are seats at the gate rooms,” he says.
David Lenot, airport practice leader at video surveillance specialist Genetec, says delays at security can cripple a passenger’s desire to shop. However, he also says that gate hugging might be a side effect of cultural differences.
“You may have people come from specific countries where people would be more prone not to use retail or simply have a habit of sticking closer to the gate earlier,” he says.
A US-led phenomenon
Indeed, when it comes to airports, Van Rÿswÿck says that there is a massive cultural difference between the US and the rest of the world. Gate hugging could be more of a US phenomenon due to the way those airports are structured.
Most airports worldwide feature a separate holding lounge where passengers can shop before they are called to the gate, where retail offers are usually more limited. However in the US, many airports – aside from the few that have been privatised – consist of a ‘processing head-house’ owned by a port authority, followed by concourses which are airline-owned.
Because airlines manage these post-security zones, passengers know roughly where their gate will be from the outset and are therefore more inclined to move into those areas sooner. Van Rÿswÿck says that this could be a reason why boarding gates at US airports feature a stronger retail offering.
“Because [the processing head house] is a port authority-run service, they are not looking to overly commercialise it,” he explains. “They get some income from it, but it’s not a main focus, just as the British Airport Authority airports back in the early 80s and 70s were government-owned and not pleasant places to be.”
Bringing dining options to the gate
Airports in the US have already begun finding ways to accommodate ‘gate huggers’, while combining it with another trend not exclusive to airports – the modern-day individual’s overwhelming desire to look at screens.
One concept being explored is a ‘mobile retail cart’, which could be parked at certain gates and offer products tailored to passengers based on their destination. Meanwhile, customers at JFK International, Washington National and Newark Liberty are able to order food from a suite of iPads set up near boarding gates.
Start-ups have taken the latter idea and are running with it. The Airport Sherpa app allows passengers at Baltimore Washington International to order food or duty-free items from their phones. Goods can be picked up from shops or delivered anywhere in the airport – including at the gate. The app even tracks passengers’ flight schedule, ensuring that deliveries can go ahead even in the event of a gate change.
“Gate hugging is a very natural thing to do – I do it,” says Airport Sherpa co-founder Mayank Gandhi. “I don’t want to miss my flight or miss the opportunity to store my carry-on in the overhead bin before it runs out of space. But that shouldn’t mean I have to settle for what’s next to my gate.”
Airport Sherpa’s CEO Patrick DellaValle says the app allows passengers to access duty-free and food offerings they might not otherwise have access to – if it’s in a different terminal, for example – thus improving the scope of an airport’s retail investment.
The app is set to launch at a number of US airports in the future, but DellaValle also thinks the idea could have appeal at airports abroad.
“When we talk with airport partners in Europe they still see the same value proposition,” he says. “Certainly there are going to be aspects which are a bit different, but when they run their analysis of what their customers want from an experience standpoint – alongside the key drivers that they see as being able to increase overall revenue – our service offering fits exactly what they are looking for.”
Finding the ‘critical mass’
PQ: Retailers need to consider whether they will have the ‘critical mass’ required to make their operational costs worthwhile
US airports may be taking steps to monetise gate rooms, but should airports elsewhere take the plunge?
Lenot says the first step should be finding out whether passengers are actually dwelling for too long at the gate. Nowadays, airports can use a variety of technologies to understand the movement and behaviour of passengers through terminals, giving them key performance indicators that they can then apply to their retail strategies. Genetec’s Airport Sense solution, for example, uses cameras and sensors to provide actionable intelligence about passenger flow through terminals.
“If you could use CCTV cameras or any other measuring technology, you would be able to assess the dwell time of people in the seating area next to the gate, so that’s a good indicator,” says Lenot.
Van Rÿswÿck says airports would have to be careful when they consider offering a larger retail offer at gate rooms, as it could ‘cannibalise’ the revenues from their existing retail mega-hubs.
Whether retailers are setting up shop on the high street or at airports, they need to consider whether they will have the ‘critical mass’ required to make their operational costs worthwhile. Ultimately, airports that operate a call-to-gate strategy might not be able to guarantee this – particularly if the overwhelming majority of consumers pick up items in the departure lounge.
“If I’m a concessionaire looking to buy space and the airport says, ‘I’ve got this great location, but only 3% of our passengers per annum go to that particular gate room’, my critical mass for being able to service that location is suddenly tremendously diminished,” Van Rÿswÿck says.
“I would give the gate huggers a reason not to hug the gate. If people want a quiet area, then provide a quiet area. If people are nervous, communicate your way-finding more effectively and make people comfortable that they aren’t going to miss their flights so they are happy to stay in that commercial environment.
“That to me is not only an easier solution, but also one that I think would deliver better returns.”
