Airports lag in digital transformation despite heavy investments

In a recent report from Airports Council International (ACI), the global industry body representing over 2,000 airports, findings reveal a significant gap in the adoption of digital technologies between airports and other sectors, particularly retail and hospitality. While airports have been investing heavily in digital transformation initiatives, particularly in biometrics for smoother passenger experiences, they have notably lagged in integrating commercial digital solutions that could enhance their non-aeronautical revenue streams—such as retail and food and beverage (F&B) offerings.

The ACI report underscores the necessity for airports to innovate digitally to retain relevance among consumers, especially younger demographics like Generation Z, who expect a seamless integration of online and offline shopping experiences. “The inconvenient truth is that for most airports, a relatively small percentage of their passengers currently engage with their digital products and services,” the report states. This presents a considerable opportunity for airports to foster engagement and drive incremental revenue by offering more appealing digital interfaces.

The report identifies a range of successful digital frameworks employed by major brands and marketplaces, including platform models like eBay, Uber, and Airbnb, as well as comprehensive e-commerce applications like those seen with Amazon. It highlighted that many airports mirror the operational structures of well-known commercial retailers but do not meet the same expectations for a digital journey, dampening customer interaction with their offerings.

The findings of the ACI report align with a travel retail study conducted by Kearney, which was also released recently, affirming that rapid technology deployment is crucial for improving sales conversion rates in airport retail spaces. The need for digital enhancements comes amidst a challenging operational environment where rising costs due to inflation, shortages in workforce, and supply chain disruptions are taking hold.

During a presentation at Aviation-Event 2024, held in Sofia, Bulgaria, ACI Europe’s deputy director general, Morgan Foulkes, discussed the implications of these trends for airport revenue. He mentioned, “We finished 2023 with only 43% of European airports having fully recovered their passenger numbers (versus pre-pandemic).” In a stark contrast, the report noted that non-aeronautical revenue surged by 17% in the years 2019 to 2023, while aeronautical revenue grew marginally by just 2%. Foulkes pointed out that the net positive impact of €8 billion observed primarily resulted from this increase in non-aeronautical revenue.

As airports strive to adapt and restore their financial footing post-pandemic, the focus on enhancing digital retail and food and beverage experiences is expected to play a pivotal role in compensating for the slow recovery of their traditional aeronautical businesses. The ongoing evolution of technology and consumer expectations suggests that airports will need to create a more engaging digital landscape if they are to attract and retain passenger interest effectively.

Source: Noah Wire Services