Bagging Extra Revenue

Airports have to help passengers manage their baggage which inevitably leads to costs, but how can these be turned into a revenue stream? (ARINC)

There’s no doubt that airports are becoming ever-more reliant on non-aeronautical revenue streams. David Elliot of The Excess Baggage Company explains that with a little lateral thinking airports can squeeze extra revenue from some unexpected channels.


Airports have to help passengers manage their baggage which inevitably leads to costs, but how can these be turned into a revenue stream? (ARINC)

There are certain things an airport has to do.  It has to operate a check-in.  It has to give passengers information.  It has to help passengers manage their luggage.  These are all costs to the airport but how can it turn them into a revenue stream?
In the check-in hall, there are a number of additional offers the passenger might require and be prepared to pay for.  They may want to buy more luggage items in which to pack those last-minute souvenir purchases, or an extra strap for their bag.  They may want to weigh their luggage or check the cost of their excess baggage on a connecting flight before they get to the bag drop desk.  They may want their luggage wrapped for added security or to protect an expensive suitcase.  At security, they may need a post and fly service to avoid losing a confiscated item.  By making sure all these services are readily available right where the passenger will need them; there is considerable opportunity to generate additional income.
The figures are not insubstantial.  A single coin-operated weighing machine can take anything up to £3,000 (US$4,800) per month, while a bag wrap facility will yield £1,500 (US$2,400) or more, which is what they currently deliver at airports including London Heathrow, Stansted, Gatwick and Manchester.

The customer experience doesn’t, however, begin at the terminal doors, and there is much that an airport can do to build a relationship with a customer from the moment he or she books their tickets. (The Excess Baggage Company)

The information desk is another potential source of income.  By adding concierge services, such as hotel reservations, ticket booking, car rental, sale of sim cards and Wi-Fi devices (which can save a family of four on holiday in the Mediterranean more than €1,000 [US$1,300] in a week in potential roaming charges).  The expense of providing these services can be turned into an income stream.  One airport that has gone down this route is seeing sales of over £1m (US$1.6m) per year across two terminals.
Duty free sales are, of course, a significant money-spinner for any international airport.  Again, by providing additional services to passengers using this facility, airports can generate extra income.  Shop and collect, as well as home delivery on duty free items not only add a revenue stream, but also increase sales as passengers will be tempted to buy more if they can avoid the hassle of carrying bulky purchases onto a flight.  Offering a gift delivery service is another way to prompt sales, encouraging passengers to think of buying a little something for friends, family and business colleagues.  Smart marketing can produce even more additional income.  At a simple ‘left luggage’ facility, sophisticated SMS messaging services can be used to alert customers to allow sufficient time to retrieve their bags, get to the gate, and shop.  Special offers and other cross-selling promotions can be forwarded with these messages.  Advertising space can be sold on bag wrap, offering a unique marketing opportunity to travel operators or other service providers, and creating a significant extra revenue stream.
 
Extending the reach
The customer experience doesn’t, however, begin at the terminal doors, and there is much that an airport can do to build a relationship with a customer from the moment he or she books their tickets.
Adding valuable passenger services can increase revenues while improving the passenger’s travel experience. (The Excess Baggage Company)

As part of the booking process, customers can be invited to have their luggage delivered door-to-door from their home to their hotel.  This allows passengers to travel baggage-free – a win for them, as they minimise check-in queues and security irritations, as well as for the airport and the airline because there are fewer bags to manage.  They can also be offered the option of purchasing luggage online – whether that’s via an airport’s own site, or a ‘white label’ facility that is branded as part of the airport’s offer.
These activities can then be used to build up valuable information from passengers that it might not otherwise be able to collect.  This can be used to tailor offers from the airport or its concession partners to specific passengers, travelling to particular destinations at particular times.
 
A joined-up approach
Providing such ‘extras’ in a cost-effective fashion can be a complex task.  Some baggage management services, such as lost and found or left luggage, will tend to be located in arrivals, while others will be in departures.  For smaller airports, with only one concourse, it is relatively straight forward to merge these into one outlet.  Adding other options, such as concierge facilities, will make the concept a more viable commercial proposition.
Even for larger and more complicated airports, it is still much easier to merge these functions into a single operation of multi-skilled staff.  Outsourcing these tasks to a single supplier who can offer a multi-skilled staff from a single entity, can save cost, space and management time.  Moreover, the expert knowledge a specialist supplier can bring to the table will result in high standards of service, and should almost certainly deliver an overall increase in the concession fee.  While most airports should see a significant upward trend, in the right circumstances, the concession fee can be more than doubled.
 

A bag-wrapping service available right where the passenger will need it may generate additional income. (The Excess Baggage Company)

Right services in the right location

No two airports are the same, and the blend of services that work perfectly at one location will not be suitable at another.  Bag wrap, for example, appeals to certain categories of passenger.  The concept is well established in southern Europe, especially Italy and Spain, while passengers travelling to and from Africa, the former Soviet Union, the Middle East, Southeast Asia and Latin America, are also enthusiastic users of the service.
Specialists packaging services will be in demand at airports serving routes attracting particularly large numbers of passengers travelling with large or fragile items such as baby or sports equipment.  Bag-weigh facilities will be welcome at airports serving travellers flying on low-cost airlines, where excess baggage fees are often charged.  Similarly, left luggage facilities will be most popular at hub airports serving mainly transit passengers, particularly at cities such as Paris, London or New York where there are plenty of off-airport attractions.
Luggage management services also need to be tailored to the security regulations and requirements at each particular location, taking into account legislation currently in place, as well as the possible implication of any changes in the future.
But of course, it’s not only about the money.  These initiatives aren’t just about increasing sales – they are also providing valuable services to passengers, that can only improve their experience as a traveller, and the impression created about the airport.

As part of the booking process, customers can be invited to have their luggage delivered to door-to-door from their home to their hotel. This allows passengers to travel baggage-free – a win for them, as they minimise check-in queues and security irritations, as well as for the airport and the airline because there are fewer bags to manage. (KEY-Archive)