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Many retail operations would kill for the kind of captive audience that airports enjoy, especially as flying becomes more accessible via low-cost carriers and basic economy. But the audience that’s sitting by the gate — wondering where to buy a croissant, neck pillow, or moisturizer — is now less likely to spend money out in the parking lot, according to a webinar presented on Tuesday by CB Insights.
Airport parking revenue is suffering due to the rise of cheap, easy ridesharing — flyers are no longer forced into paying to park their cars for days or weeks at a time. Airports also have a history of fighting ridesharing companies in favor of longstanding relationships with taxis.
Instead of fighting Uber and Lyft, airports may have to get on the bandwagon and evolve. Empty parking spaces are wasted real estate and could be converted into some type of entertainment-related offering, according to CB Insights.
Global airport revenue per passenger dropped from $20.36 in 2014 to $17.27 in 2016, and non-aeronautical revenue dropped by $1.46 over the same period, which includes parking, retail concessions, and rental car concessions, among other items, according to Airports Council International as cited in the webinar.
Looking into the future, self-driving cars might further hurt airports’ bottom lines as flying becomes less necessary. Travelers might want to sleep in the car while it drives itself with little to no input from the passenger. If airports can’t stop that future trend from developing, they can at least use self-driving vehicles as shuttles between terminals.
“Autonomous cars are going to take just as much market share away from the likes of hotels and Airbnb as from airlines,” said Devin Liddell during an interview with Skift in April. Liddell is principal brand strategist at Teague, a Seattle-based design firm that focuses in large part on travel and mobility.
Retail inside the terminal is still crucial, however, and airports still struggle to make the kinds of upgrades that would really take advantage of the captive audience. In this way, New York’s LaGuardia is still a basket case: ugly, frustrating to navigate, and brimming with stale food. Although, its multibillion dollar redevelopment is currently underway.
The theory is that flyers who are miserable spend less money in the terminal, and better experiences lead to happier shoppers. People who are upset about spending two hours in the TSA line before an invasive pat-down are even more frustrated to be slouched under dim fluorescent lights eating McDonalds for lack of other options.
The rise of healthier chains in airports like Pret A Manger helps, as does the presence of fitness centers, yoga, and sleep pods. For those with status, exclusive lounges are sometimes attractive — United even has its hidden restaurant in Newark, but not all lounges are created equal.
Indoor improvements could turn mediocre airports into attractive centers of commerce, but thinking outside the terminal is also part of the equation.