Airports are spending a significant portion of their marketing budgets on customer engagement tools, including a sizable investment in developing mobile applications. By 2018, about 80% of airports will have implemented mobile apps as a means to directly engage with passengers, according to the 2015 SITA Airport IT Trends Survey.
NB: This is a viewpoint from Cormac Corrigan and Mark Lenahan, independent advisors to airports, airlines, retailers, and loyalty programs.
To understand the investment in mobile, we compared mobile app downloads for a selection of the world’s largest airlines and airports. What we found is that, when we accounted for size (by passenger volume), airline apps were downloaded 14 times more often than airport apps.
Anecdotal evidence, personal usage, and experience in other verticals, such as retail, all suggested to us that airline mobile apps would be more heavily used than their airport counterparts. But what surprised us is that the gulf is much wider than we expected.
- Amongst 25 of the world’s largest airlines, the app download estimate is around 117 million downloads, compared with 1.5 billion passengers carried annually.
- However, amongst 25 of the world’s largest airports, the download rate was 7.2 million downloads, against a passenger base of 1.3 billion passengers.
The publicly available data is limited, and only allows for rough analysis. But this is an order of magnitude difference between airports and airlines.
To be fair, it would be a mistake to read too much into the ratio of downloads to passengers. Passenger numbers are not unique people, each passenger is counted every time he or she boards a plane or traverses an airport, so every return journey counts one person at least twice—both on the plane and at each airport.
Meanwhile, an app installed once may remain present for the entire trip or multiple trips.
Here, we are using download numbers to compare airlines' and airports' abilities to publish apps, but downloads are a poor metric for customer engagement.
According to an October 2015 study by AppsFlyer, reported by eMarketer, only 3.3% of users are still active 30 days after installing an app. This was based on 450 million installs of e-commerce, travel, and utility apps (but excluding games and social media apps).
Why is this important?
For many airports in recent years, aeronautical revenue (fees charged to airlines) has either been static or in decline, when compared with passenger numbers, while revenue from retailing and other commercial activities (products and services provided to passengers) has grown significantly.
For example, Changi Airport Group’s 2015 report shows only 0.2% growth in passenger numbers, while aeronautical revenues contracted by 3.6%. However, “airport concessions and retail income” grew by 7%.
Another recent example, Heathrow (SP) Limited’s 2015 annual report, shows that aeronautical revenues grew only 1%, compared with a 2.2% growth in passengers, yet retail revenues grew by 8.4% during the same period. Industry-wide, non-aeronautical revenues now contribute close to half of total airport revenues.
Future shock
A significant share of the business case for airport mobile development rests on the perceived need for airports to better engage with passengers directly. By that metric, we feel that investment in consumer mobile apps may be a waste of resources for airports and offer poor return-on-investment, relative to other mobile initiatives.
Customer engagement and passenger experience can be vastly improved with other types of mobile technology. Some examples include:
- mobile enabled (responsive) airport websites
- enterprise apps used by operational or customer facing staff
- devices placed in retail outlets and restaurants.
Likewise, wifi and beacons can be used to improve the passenger experience considerably, whether or not the official airport app is installed on the passenger’s mobile device.
The big challenge for airports is that, as a passenger, you are essentially anonymous to the airport. The airlines and/or agencies know all about your itinerary, but airports do not.
Another issue: The time spent in the airport is relatively short, at least when viewed from the perspective of the full end-to-end customer journey. Airlines already have a strong and established relationship with passengers in the pre-travel, airport, and flight journey phases. They are positioning themselves as the trusted source of essential information and travel products related to the entire passenger journey, including at destination.
Just because mobile isn’t working doesn't mean that direct customer engagement cannot be achieved. But we think airports need to reconsider how they go about it.
Airports already recognise they need much better collaboration with other partners in the travel journey. These partners include the airlines, the alliances, travel agencies, and loyalty and frequent flyer programs. Many of these stakeholders have a longer and deeper relationship with the customer.
Airlines and other partners need to facilitate airport involvement in their personalised communications with passengers. This will not only open new ancillary revenue opportunities but also have a significant positive impact on the end-to-end customer experience.
NB: This is a viewpoint from Cormac Corrigan and Mark Lenahan, independent advisors to airports, airlines, retailers, and loyalty programs.