Recently, the Airports Council International (ACI), which is the voice of the world’s airports, released a guide on airport commercial digital transformation best practices. ACI is a global organisation which represents the interests of airports and also promotes airport standards and excellence in the aviation industry. ACI World is the leader globally in airport management and represents more than 2600 airports across more than 190 countries and territories.
It states in its best practice guide that commercial digital transformation aims at creating a seamless and efficient ecosystem that enhances the passenger experience and optimizes non-aero commercial revenue potential for the airports. Non-aeronautical revenues encompass a wide range of commercial activities within airport premises, including retail concessions, food and beverage outlets, car rentals, advertising, parking, and property development. The financing of airports relies upon two broad streams: aeronautical revenues from airlines and passenger charges; and commercial revenues from other activities at the airport. According to the ACI economics report, an average of 40.4 percent of global airport revenues derive from such commercial revenues.
With the continued evolution of commercial digital transformation, airports across the world are expected to increase their investments in commercial digital solutions to meet the changing demands of passengers and maximize revenue potential. This applies not only to greenfield airports but also to other brownfield airports as well. Policy makers in planning for airports must pay attention to digital solutions at the planning stage of an airport project and not when the airport is completed. For already existing airports, the airport strategic plan must incorporate digital solutions in their Information Technology Strategic Plan for improved passenger experience and competitive advantage.
Early digital successes in other industries, it states, point to three key drivers: convenience, price and customer service. Consumers expect a seamless offline and online experience when they interact with brands. Many airports, it points out, are yet to deliver that seamless experience through digital, often constrained by legacy business models. Consequently, relatively few passengers engage with an airport’s digital offer and are more likely to build digital relationships with their airline.
A fall out of the pandemic has been that digital passenger behaviour has accelerated, especially where there is a high volume of leisure passengers. So there has never been a more important time to build or revisit a commercial digital strategy to drive revenue and passenger satisfaction.
Airports are advised to first decide where the value is for their commercial and passenger experience in the use of digital. A starting point would be with an airport’s end-to-end journey and subsequently to look at how digital can add value, remove pain points for passengers or improve how passengers get specific jobs done, such as parking or navigation.
It notes that digital provides value in three core areas: by reaching more passengers before and during their journey; by extending dwell time via the use of digital and mobile channels; and by improving the airport offer with new digital-only products and services. It further points out that It’s important to understand digital business models before creating a new airport digital strategy. There are many models, but e-commerce and platform/marketplace will drive the most immediate value for airports.
Airports are advised to map their current digital maturity as an organisation before they create a new strategy or roadmap. Although there are many ways to benchmark digital maturity, the best practice guide methods advised are practical and will allow an airport to articulate the key benefits that digital investment will bring to passengers and the internal change required to activate those benefits, the latter usually being the hardest to deliver for most organisations.
Airports are also advised to build a commercial digital technology architecture with a unified customer data platform at the centre. It points out that different commercial products and services offerings will likely have different underlying technology. Airports hence need to ensure these are all interconnected for an enhanced purchase experience. It is also important to ensure that any digital technology estate needs to be maintained and constantly updated to be relevant.
Digital, it states, offers a significant opportunity for airport retail revenue through increased penetration, higher conversion rates and an increase in average transaction values. It removes the traditional physical constraints of airport retail, enabling propositions, such as home delivery, virtual retailers, extended ranges and the ability to cross and upsell. Airports would do well to further increase revenue through better application of data to their traditional terminal physical advertising estate.
It points out that considering digital and data driven approaches is the most appropriate solution for airports to manage revenue and differentiate their offer. It would enable airports to adjust the pricing structure to optimise the base revenue; use data science to create advanced revenue management algorithms; use digital to drive tactical discounts and personalised offerings; and support all the above with targeted digital marketing investment.
Services at an airport, it states, are mostly offered as a standalone product and not as a combo or à la carte end-to-end service offering, which can be pre-booked to drive convenience and/ or experience. There is, it points out, an opportunity to capitalise on the potential of technology platforms for better passenger experiences and revenue maximisation. As such, service offerings can bring in considerable non-aeronautical revenues.
Building a digital infrastructure across the airport is critical to improving performance and driving wider engagement with passengers. However, any digital ecosystem is only as good as an airport’s ability to attract passengers to the platform it points out. Engagement and relationship management are a core part of a wider digital airport.
Data, it states, is a key enabler for commercial digital transformation. Airports are advised to focus on solid foundations. They should audit commercial data sources and create a roadmap to make them usable as part of a central data repository. Digital and web analytics should be a core pillar of data strategy and used to drive day-to-day trading and digital revenue performance. It advises airports to ensure the digital estate meets all global privacy regulations and that it is reviewed on a regular basis. Also commercial data infrastructure should be built after appropriate discussion and agreement with IT and other stakeholders to avoid creating data silos.
Further, airports should use traffic, average transactions and conversion metrics to build KPIs for the digital business case. They should ensure there is a booking channel strategy for each digital product and service and that stakeholders across the business are aligned to help deliver business objectives. Also, airports are to confirm the return on investment through tangible and/or non-tangible gains from the project.
Airports at the start of their digital journey are advised to create a digital centre of excellence organisational model to focus effort and create pace of change. For instance, a commercial centre of excellence will include the core functions of marketing, digital, distribution and data. It points out that with maturing digital capability, airports should move from a team structured by channel to one structured around the passenger, by adding a cross-experience team, which is responsible for owning the end-to-end passenger journey across all digital channels. Passengers only see and expect one journey through the airport, irrespective of what channel they use, so airports need to enable that capability in its organisational structure.
It points out that focusing on continuous improvement, product management and sprint methodology are best practice development for digital. Airports are to consider setting up a central digital governance structure sponsored by the executive team and consider the right mix of in-housing versus outsourcing.
Commercial digital transformation offers many benefits for airports, but the road to reaping those benefits isn’t without obstacles. New technology for instance disrupts routines. Aligning airlines, concessionaires, government agencies, security services and other stakeholders with the digital vision is crucial. Digital transformation is not a one-time event, but a strategic initiative that requires continuous development and refinement. By embracing a long-term commitment to this initiative and addressing these challenges strategically, airports can foster collaboration among stakeholders and unlock the immense potential of technology to create a seamless and positive travel experience for everyone.
It points out that most passengers already experience high levels of digital in their daily lives. Airports that haven’t started on the digital journey are already behind and need to start now. Those with a well-established programme need to go faster to keep up with changing consumer demand. The key point is that digital is more agile than traditional airport infrastructure and airports need to start or accelerate their digital transformation now. The ACI World – Airport Commercial Digital Transformation Best Practices, 2024 can be found in the ACI store.
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