As Abu Dhabi International Airport’s upcoming Midfield Terminal prepares to accept the brands it has chosen for its 11,300 square metres of dining space in the building, other airports overseas are moving fast to upgrade their passenger facilities.
The operator Abu Dhabi Airports did not disclose to The National which brands will be in the terminal, but said the concessionaire contracts went to the Emirates Group subsidiary Emirates Leisure Retail (ELR), the airport and motorway dining specialist HMSHost International, the duty free retailer Lagardère Capital and the British caterer SSP.
Abu Dhabi’s European peers, meanwhile, are racing to redesign their terminals and offer new services to pull more passengers into their stores, in the face of online competition and militant attacks that have kept away some big-spending Asian travellers.
Seeking to boost the key measure of retail sales per passenger, airports are expanding and refurbishing shopping areas and ensuring routes to gates steer customers past – or through – as many stores and restaurants as possible.
Vienna Airport, for example, plans to expand the shopping and food area in its Terminal 2 by about 50 per cent – including a duty-free store positioned right after security, which passengers must pass through.
London’s Stansted has just completed an £80 million (Dh425.3m) makeover that increased space in the departure lounge by 60 per cent, providing more room for shops.
“Airports now are basically shopping malls with runways,” said John Jarrell, the head of Airport IT at Amadeus, which supplies technology systems to the industry.
Retail accounts on average for almost a fifth of airports’ revenue, a proportion that has grown steadily in the past decade, according to the airports association ACI Europe, and is increasingly relied upon to help fund infrastructure and services.
But the lucrative business has been hit by falling numbers of Asian travellers, traditionally the biggest spenders. Major European airlines have reported falling demand from passengers from China and Japan this year as a result of the attacks in Paris and Brussels.
Airport retailers’ advantage of a captive audience of travellers has also been undermined by people being able to shop and compare prices at will on mobile devices, so they are being forced to employ new strategies to court customers.
“Air travellers have become very discerning price-wise and impulse buying at the airport is becoming rarer,” said the ACI Europe spokesman Robert O’Meara.
Frankfurt airport is trialling a scheme where passengers in the Lufthansa lounge can shop on their tablets and have goods brought to them, and another where passengers can order food from tablet-toting staff to be brought to the gate and eaten there or on their plane.
Stansted, Britain’s fourth-busiest airport, is offering hand massages at the Jo Malone area in its duty-free store, while its bigger London rival Gatwick and Copenhagen airport have thrown up temporary “pop-up” shops to tempt passengers into spending there and then, rather than waiting.
Many European airports, including Copenhagen, Gatwick, Stansted and London Heathrow, also now offer “collect on return” services that allow customers to buy goods and pick them up when they return from their trip.
Stansted launched the service at the beginning of the year and customers are leaving about 3,000 bags a week full of airport-bought goods and collecting them upon their return.
Heathrow, Europe’s busiest airport, offers passengers not flying via Terminal 5 the chance to order items from the Chanel store there – a service much used by high-net worth customers flying to the Middle East from Terminal 4.
“If you give passengers good service, put them in control of their time, they will spend more with you,” said the Heathrow chief executive John Holland-Kaye told.
His airport completed a £40m revamp of its luxury shopping area last year that added more shops, including Louis Vuitton and Bottega Veneta.
France’s Nice Côte d’Azur Airport announced in October it was undertaking its largest-ever commercial renovation – one that it hopes will achieve its vision to create the “most surprising commercial experience in a European airport”, Filip Soete, the chief commercial officer, said at the time
The rejuvenated Terminal 1 is set to open this month, with 11,000 sq m of its area impacted by the revamp, seeing retail space grow by 160 per cent, lounges by 70 per net and seating spaces by 60 per cent. In Terminal 2, meanwhile, 23,000 sq m will be updated, with 110 per cent more commercial space, 90 per cent more seating and lounges doubled in size, to open in May 2017.
“By 2017, both terminals will have been entirely renovated to provide double the retail areas and double the waiting areas,” Mr Soete said.
Several new outlets have already opened in Terminal 1. Mr Soete said Nice Côte d’Azur Airport has opened its first walkthrough duty free store in Terminal 1, in partnership with Aelia, so far generating a sales increase of 40 per cent.
“We began with the idea two and a half years ago to revamp our two terminals, and are investing €4m [Dh188.8m],” Mr Soete said. “Our vision is to deliver the most surprising commercial experience in a European airport, with a real sense of place and local brands to create that surprising effect. We want to be a little bit different and that was a goal throughout the tender process.”
This sense of place will be particularly evident in the food and beverage offer, he said, with two new operators, SSP and RELAY France, developing compelling concepts consistent with the airport’s vision. “These are the most surprising and, while being entirely contemporary, most loyal to our locality, the French Riviera,” Mr Soete said.
While the concept of duty-free was invented in Shannon, Ireland in 1947, it has since lost meaning for European travellers, which do not get the tax-free prices that passengers from outside the European Union enjoy.
Munich Airport’s new satellite facility for its Terminal 2 was put into operation on April 26, 2016. “As one of the world’s most advanced airport terminal facilities, the satellite offers passengers a new level of comfort,” the airport said.
Thanks to the satellite building, work to expand Terminal 2 capacity is already fairly well advanced. By contrast, the next big construction project in the passenger segment, the refurbishment of Terminal 1, is still at the planning phase. The refurbishment will significantly increase the appeal of Terminal 1, the airport said, creating enhanced capacity and expanding the functionality of the terminal.
Munich Airport plans to build an extension westward from the Terminal 1 building. The project will enhance the efficiency of passport and security screening and speed up the baggage claim process. Along with additional aircraft positions, Terminal 1 will gain a new central shopping area.
The Frankfurt airport operator Fraport illustrated the importance of Asian travellers when it said that passengers from China, Russia, South Korea, Japan and Vietnam made up just 7 per cent of passengers in 2015, but 31 per cent of retail revenue.
Both Fraport and fellow operator Aeroports de Paris said this week that retail sales per passenger had dropped in the first quarter of 2016, partly due to the impact of the Paris attacks.
Faced with such hurdles, airports are trying to maximise the time available to customers to shop by reducing times spent queuing at security checks and giving people better directions via apps or touch-screens to find their way around often sprawling terminal buildings.
Fraport’s app, for example, allows passengers to take a picture of a sign at Frankfurt airport and have it translated into Chinese.
European airports relied on non-aeronautical revenue – sales earned from retail and car parking – for 40 per cent of their revenues in 2013, the most recent year for which data is available, according to ACI Europe.
Of that revenue, retail – including food and drinks sales – accounted for 46 per cent, up from just 28 percent in 2008. That equates to about 18 per cent of airports’ total revenue.
Typically, airports receive fees from retailers comprising of rent and royalties from sales. Citi analysts said of the airports they covered, Heathrow had the highest per passenger retail revenues.
The British hub increased its retail revenue by 9 per cent in 2015, about a fifth of its total annual revenues, representing per passenger retail revenue of £7.58, up from £7.14 the previous year.
Across the Atlantic, Los Angeles airport has gone one further. In November authorities there approved opening a special terminal for the rich and famous to wait for their flights, far from the paparazzi and riffraff.
The so-called “remote lounge” will be housed in a separate hangar and eclipse even the business class and first-class areas available at major airports. Celebrities, business executives and other well-heeled individuals can expect to pay US$1,500 to $1,800 to access the space, according to US media.
Back in Abu Dhabi, the people behind the Midfield Terminal were all too aware of the importance of giving passengers a memorable experience when deciding on which firms to include.
“We challenged bidders to capture the essence of Arabian hospitality,” Mohamed Al Mazrouei, the chief executive of Abu Dhabi Airports, told The National.
“The winning concessionaires were those that had demonstrated their ability to deliver on the vision behind it all – providing spectacular ideas that will translate into sensational experiences, exceeding the expectations of our business partners and customers alike.”
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Published: May 5, 2016 04:00 AM