The appeal of the airport lounge is waning, so airports must start looking at how to broaden the number of accessible revenue streams. David Ellis and Tom Hardiman from Egremont Group explain how the market is changing, with a case study from Dublin Airport.

The appeal of the airport lounge is clear from the passengers’ point of view; it provides a quiet space to work, relax, get away from the hassle of the main airport terminal. Yet these areas are increasingly becoming overcrowded due to the proliferation of airline frequent flyer programmes.

While the concept of the airport lounge has evolved slightly in the past 20 years, the main innovations have focused on the look and feel rather than creating a new experience.

Savvy travellers are voting with their feet and starting to distribute their spending along the journey steps in different ways. This may mean buying a low-cost flight but upgrading the airport experience with premium parking, fast-track security and a pay-to-use lounge. It is this ‘choose your own experience’ that is opening up a number of new revenue streams for the airports.

The opportunity for airports

Across the world all airports generate income from non-aeronautical commercial revenue streams and this trend is now accelerating in the U.S. Traditionally, this revenue has been earned from retail, car-parking and property. Yet these traditional categories are facing their own pressures with the rise of online retail eating away at traditional duty-free retail goods revenue and the introduction of Uber and better transport links threatening car-park revenue.

Leading airports are tackling this by creating a differentiated passenger experience, especially those that aspire to become, or already are, international hubs. This is particularly evident in the investment and innovation in the food and beverage offering to the extent that it is starting to overtake retail in terms of concession rates and income in some smaller airports. However, this is just the tip of the iceberg.

Upgrading the airport experience

As a first move, airports have begun to create pay-to-use lounges. A great example of this is the 1903 lounge at Manchester Airport, recently voted the third best airport lounge in the world. Available to any traveller these lounges compliment overcrowded airline-owned lounges, offering passengers greater choice irrespective of the ticket the passenger has bought. From a commercial perspective, this model may be provided in house or through a lounge provider.

The 1903 lounge at Manchester Airport

An alternative solution is bundling various premium services: Car-parks, fast track security and lounges; offering these services as part of a membership scheme.

The biggest and most exciting trend is the complete overhaul of the passenger experience, which streamlines the whole customer journey from arrival at the airport right through to boarding the plane. Originally operated as a protocol service for government officials and VIPs, this new end-to-end experience is being commercialised and opened up for use by passengers willing to pay the extra: The re-imagined VIP Service.

What is a VIP service and how can it create revenue?

A VIP service is a dedicated facilitation service that has a separate entrance to the airport, private terminal building which includes premium parking, private and discreet fast-track check-in and security screening plus luxury individual lounges. The final part of the journey to the aircraft is carried out in a chauffeur driven limousine.

Interestingly, prices do vary; the most recent launch has been the Private Suite at LAX, very similar to the Heathrow proposition and priced around £3000.

Dublin Airport has launched Platinum Services – a private terminal that offers similar services to LAX and Heathrow but at a different price point. Grainne Morrison, Head of Business Development at Dublin Airport, below explains how Platinum Services operates.

In 2012 the commercial team at Dublin Airport were asked to take on the private terminal aspect of the business, with a view to making it more commercially viable. Previously this side of the business was facilitating a combination of commercial and diplomatic passengers. A three-year programme began to examine and redevelop the business model; scaling it for growth.

Doors shut in early 2015 to renovate the building and recruit and train staff. Platinum Services launched on 30 August 2015, not just as a VIP offering, but as a fixed price private terminal premium service for all.

Platinum Services has just had its three-year anniversary, growing year on year since it launched handling 35,000 passengers a year and the team has recently been nominated for two International Customer Experience Awards.

“We opened with commercial general aviation in mind, in other words, passengers who arrive in on scheduled and private aircraft who require a bespoke service,” said Grainne Morrison, Head of Business Development at Dublin Airport. “This enabled us to engineer a partnership deal early on with both Signature Flight Support and Universal Aviation so that Platinum Services would handle all general aviation movement through Dublin Airport. This move gave us the scale we needed to open the terminal 24/7 and at the same time trebling the team and saving the business from a commercial perspective. Business trebled overnight as the service became mandatory for all general aviation passengers.”

All private passenger security screening is now provided by Platinum Services. The centralised, private passenger security screening area allows Dublin Airport to offer and create a bespoke customer experience in keeping with expectations of the premium market. Located in a discreet area beside the terminal with a private entrance and car park, clients can relax in the private suite with a dedicated team to look after them.

Morrison explained that much of what the team do is often invisible to the passengers. “We take away the pain points of the airport experience, on the surface it all looks seamless but underneath there is a huge amount of coordination.” This co-ordination is helped by the fact that Dublin’s service is run by the airport authority itself, rather than relying on a concessions model.

TARGET MARKET: Predominantly high-end C suite executives, plus ultra-high net worth individuals from general aviation. The team also handle diplomatic, ministerial and state movements – notably the Pope’s recent visit to Ireland.

ETHOS: One standard of excellence for all passengers. Dublin Airport’s Platinum Services is available to all passengers and is not dependent on the class of ticket. Customer service and the human touch is at the heart of the business model and day-to-day operations.

Morrison continued: “We are the first welcome and final farewell for a range of clients from home and abroad all with different backgrounds. Our service reflects the professionalism that is adopted throughout our entire airport operations and our staff take great pride in what they do. We have a policy of never saying no, and source whatever a passenger needs doing so with a smile.”

THE TEAM: Platinum Services Manager, Philip Bolger, leads a team drawn from across the airport’s staff.

“When we started to redesign the operating model in 2015 we had no doubt that we had the skills within our existing staff to create a new premium service. By recruiting from all departments in the airport our team has a great mix of expertise and wide-reaching contacts, perfect for the unpredictable nature of servicing passengers from the general aviation market. If they don’t know the answer, they know someone who does,” explained Morrison.

PRICE POINT: Dublin’s Platinum Services are deliberately priced for a business audience.

“Our passengers are mainly business users, some of whom travel through the private terminal three or four times a week, we are literally an extension of their office. As such we have priced our services to be acceptable in a business context,” said Morrison.

FINAL WORD: Passengers may forget what you did but they will never forget how you made them feel.

Morrison concluded: “The growth of VIP services around the world has meant there is a drive to be the slickest and the shiniest. If you push it too far there is a real danger you lose the human element of the offering. Never lose sight of the people coming through the door, read them, understand them and make their day better. If you push it the service becomes sterile and predictable, our passengers check into our services to relax, our team know them and want to do their best by them, that is why they come back time and again.”

A conservative estimate would be that the VIP services could generate between $10 million and $40 million revenue per year. In addition to charging passenger facilitation fees, the airport can also create further revenue or benefit-in-kind from sponsorship and placement deals.

But it’s more than revenue

It is clear that a VIP service improves the experience for passengers who are willing to pay and therefore generates revenue from this. However, this is not the whole story. VIP services can also support airport strategies in other ways, i.e. by acting as the key example of an airports desire to innovate and improve the overall customer experience.

The VIP service also plays a role in supporting the local economy. It can act as a key facilitation role for the business and government community. For example, one particular airport sees a VIP facility service as vital for supporting the growing film industry in the region. The VIP service can support the facilitation of people flying in for regional events, assist in the promotion of tourism, and facilitate high-profile groups such as sports teams.

Moving forward

As airports get bigger and busier the VIP proposition will continue to evolve; developing a wider variety of specific products and price points to meet local demand. Some of the propositions could well be based more on ease and efficiency than the exclusivity of existing offers. More airports will consider whether a tailored VIP proposition can complement their range of premium products and passenger choices.

One word of caution, it doesn’t matter how shiny the new private terminal, if it doesn’t link seamlessly with the existing airport it won’t work and if the passengers are not made to feel special they will quickly go elsewhere.

source : https://www.internationalairportreview.com/article/89672/vip-experience-increasing-revenues/

The AI-powered airport of the future is full of promise–and peril, writes Teague futurist Devin Liddell.

[Source Image: MicrovOne/iStock]

The first biometric airport terminal is already up and running, thanks to Delta’s collaboration with U.S. Customs and Border Protection, the Transportation Security Administration, and Hartsfield-Jackson Atlanta International Airport. Similar systems are now operational at Dubai International Airport, at least for first- and business-class passengers. While groundbreaking, these systems—powered by artificial intelligence—are early exemplars of the emerging technological transformation of airport and airline operations. They are working preludes to artificial intelligence’s eventual forays throughout the passenger experience. Part of these forays will be driven by technology; we’ll have increasingly smarter and capable tools for independently managing enormous complexities and creating new efficiencies. Another part will be driven by new competitive pressures; in the face of autonomous vehicles that will offer compelling alternatives to flying, the future of air travel will require robust improvements.

Taken together, we can reasonably anticipate artificial intelligence to finally solve for some of the most intractable problems that have frustrated passengers and vexed airlines and airports for decades. But this likely won’t be a glitch-free parade into a utopian future, and artificial intelligence represents some serious threats to passenger privacy as well as the potential for unanticipated misuses. Here are three of the biggest problems in air travel and how AI might transform them into better experiences for passengers–from eliminating lines to shaming bad behavior–along with some related visions of what could go wrong.

Replacing glacial and dehumanizing boarding processes

One of the benefits of artificial intelligence is its capacity for seeing what’s happening in ways that humans simply cannot. As an example, Google uses AI and satellite data to observe the world’s fishing fleets at work across all 1.4 billion square miles of Earth’s oceans as part of efforts to prevent illegal fishing. This same capability to see and then make sense of noisy, complex data can be used to create and manage better aircraft boarding processes. Instead of the creeping parade of inefficiency we have now, AI-powered computer vision could help architect just-in-time, queue-less experiences.

What could this look like? Imagine even an early version—informed by cameras, sensors, and an airport network in which every passenger and every bag is a node—that simply develops a basic understanding of a few interrelated data sets. A computer vision system with a dynamic comprehension of who’s at the gate and who’s not, the bags they have and the other people they’re traveling with, and even how these people physically move, can then bring those disparate data sets together to answer the question that matters most: How can we board everyone in the fastest way that never creates a line? The system would also coordinate communications with you and your fellow passengers in ways that are far more personalized than the class- and zone-based boarding routines used today. This future could liberate flyers—and the gate itself—in ways that are difficult to predict. At the very least, airport gates would feature fewer crowded waiting rooms, and passengers would spend more leisure time at airport restaurants and stores—or, even better, less time in the airport overall.

There is a more pessimistic side to this narrative, though. If AI can be used to optimize airport and airline processes, it can be used to re-architect those processes in ways that don’t necessarily benefit passengers, and instead benefit commercial interests. Put simply, AI’s strength at seeing what’s happening could be used to manipulate passengers. That fatigued family with three bored and hungry kids? AI could help ensure they’re funneled through a security checkpoint that’s adjacent to a toy shop or fast-food restaurant where they are more likely to make impulsive purchases. That lonely-looking solo traveler on a bereavement fare? AI could serve up two-for-one offers at airport bars. While this type of marketing-centric predation isn’t much different from what we already endure online, the central danger here is the challenge to human agency within an environment that should have our best interests at heart—but just as easily might be more interested in profiting from our highly contextualized personal information.

Stitching together the winged and the wheeled

Fueled by big data and machine learning, a strength of AI is grappling with complex problems and then learning innovative ways forward, which is one of the reasons various artificial intelligences have already annihilated the best human players at board games like chess and Go. This ability to create new moves—based on a practiced understanding of countless previous moves—makes AI well suited to solve for the complex machinations and movements within an airport.

Right now, the link between ground transportation and air travel in both directions is hardly ideal. For evidence, see the curbside traffic snarls at the arrivals and departures lanes of any major airport. Or, see that many airports are still grappling with how to manage the rise of ride sharing, including where to stage waiting drivers and how to replace lost revenue from parking.

Fortunately, these struggles are not our future. Instead, the north star that AI could help create is essentially an orchestrated stroll to a waiting vehicle. To facilitate this stroll, AI would continuously learn how to manage thousands and thousands of travelers at any given time as interrelated moves on a game board. Upon arrival, you would move from the aircraft through the terminal to the curb just as an autonomous vehicle—which has already been loaded with your luggage—arrives to transfer you onward. That vehicle would likely be managed by the airport but branded by the airline, offering a true door-to-door experience within a single, all-transit-included fare. Alternately, autonomous luggage carts would seek you out in the terminal or at a connected public transportation hub, or even catch their own rides to your hotel or home.

What would be missing from these experiences? Baggage carousels. Parking lots. Cell-phone lots. Jammed curbs. In their place would be a far more robust connection between the airside and landside that eliminates a currently disjointed relationship between aircraft and ground transportation.

Unfortunately, there is an opportunity for abuse here, as well. If AI can be used to move passengers from one modality to the next by essentially managing everyone as moves on a gameboard, it could also alter the rules of the game for some passengers. AI’s capabilities for learning new moves could be used to create better experiences for some passengers and less optimal experiences for others. How could this happen? Consider that we are a species with a well-documented history of racism, sexism, ageism, and more. Those same biases could find their ways into the artificial intelligences we create and manage in either accidental or overt ways, ushering in a sort of invisibly governed discrimination. Members of one religion might enjoy favored status in one airport and feel decidedly less welcome as they maneuver another. Passengers might find themselves curiously sorted by race in airport-operated vehicles. People who conform to supposed gender norms in their appearance might be rewarded with faster throughput while others confound the system, creating delays that essentially operationalize everyday social ills like sexism and transphobia. Many people are already well-acquainted with these types of discrimination, of course. But one of air travel’s underlying benefits is its ability to make the world and all people more connected, so AI working against that value would be an especially troubling outcome.

Bringing some humanity—and decorum—back to gates and cabins

Technology might seem like an unlikely savior for the more human touchpoints of travel, and it’s certainly true that the future of air travel is not all ones and zeroes. There is simply no replacement for another human who is there to lead and help us in our journey. That said, humanity is arguably not at a high point in contemporary air travel. Bad behavior abounds, from cluelessness at security checkpoints and space-hogging at gates to bare feet, nail clipping, and other sins against common sense and decency inside cabins.

Part of the problem here is actually our human preference for avoiding conflict. All this bad behavior by a subset of flyers thrives largely because no one steps forward to correct it in the moment. Put more bluntly: We’ve proven that we are not up to the task of policing and preventing our worst selves from ruining the experience for everyone else.

But, while we generally default to being overly polite, AI won’t have to be programmed with any such compunctions. Instead, AI-powered robots at the airport and AI-powered in-flight entertainment systems—and, yes, the latter would put those disabled cameras in seat-back screens to work—could broker the intelligent sharing of resources (think: more cooperative approaches to bin space use) and discretely remind flyers of their responsibility for basic decorum.

This is very adventurous territory, of course, and one fraught with Orwellian anxieties. The concept of AI-powered robots policing humans is the stuff of dystopian science fiction. That said, consider that it’s already happening; AI-powered systems in China are at work now shaming jaywalkers in a bid to improve traffic safety. So, perhaps the question isn’t whether or not we want AI prompting us toward our better selves, but rather how we can design those AI-powered systems in ways that balance individual privacy and the collective good.

About the author

Devin is a futurist who works collaboratively with clients such as Boeing, Intel, JW Marriott, Nike, Starbucks, and Toyota to design preferred futures in aviation, automotive, smart cities, personal mobility, space travel, and more. Devin also leads TEAGUE’s future-focused conceptual projects .

Source : https://www.fastcompany.com/90333075/the-future-of-air-travel-ai-that-shames-you-into-being-a-better-passenger