Below is the uncorrected machine-read text of this chapter, intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text of each book. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.
216 This chapter presents case studies of concession programs at selected domestic and international airports. The airports presented are as follows: â¢ Dallas/Fort Worth International Airport â¢ San Francisco International Airport â¢ Tulsa International Airport â¢ Portland International Airport â¢ Amsterdam Schiphol International Airport â¢ Seoul Incheon International Airport â¢ Copenhagen Airport Each airport case study presents an overview of the airport, organized as follows: â¢ Ownership/Governance â¢ Traffic Overview â¢ Passenger and Market Characteristics â¢ Estimated Sales and Revenue â¢ Sales per Enplaned Passenger â¢ Concessions â¢ Terminal Configuration â¢ Commercial Strategy â¢ Unique Concessions and Innovations 14.1 Dallas/Fort Worth International Airport 14.1.1 Ownership/Governance Dallas/Fort Worth International Airport (DFW) is governed by a 12-member Airport Board of Directors (Board). Seven members of the Board are appointed by the Dallas City Council, and four are appointed by the Fort Worth City Council in accordance with each Cityâs ownership interest in the airport. One nonvoting member rotates on an annual basis among the cities of Coppell, Euless, Grapevine, and Irving. The Board is a semi-autonomous body charged with governing the airport and may enter into contracts without approval of the City Councils. The Board appoints the Chief Executive Officer, who is charged with the day-to-day operations of the Airport. The Chief Executive Officer, in turn, hires a professional management team to assist him in that responsibility. C H A P T E R 1 4 Case Studies
Case Studies 217 14.1.2 Traffic Overview In 2009, DFW ranked fourth in the United States and seventh in the world in terms of total passengers with 26.7 million annual enplaned passengers. DFW is served by 18 airlines, includ- ing 11 domestic passenger airlines and 7 foreign flag carriers. The airport is the largest hub and headquarters for American Airlines and American Eagle. 14.1.3 Passenger and Market Characteristics O&D passengers account for 43% of total passenger traffic, and connecting passengers account for 57%. DFW passenger demographics vary somewhat by terminal. For example, in Terminal A, connecting traffic makes up more than half of all enplaning passengers (62%), who are largely busi- ness passengers (63%) and mostly male (64%). Sixty-eight percent of the passengers are between 25 and 54 years old. Of this group, 50% had household incomes above $75,000 and 30% had house- hold incomes over $100,000. Terminal E is at the other end of the market spectrum and has 86% O&D traffic with 55% leisure passengers and 54% males. Sixty-four percent of the passengers are between the ages of 25 to 54. Household incomes were higher for customers in Terminal E; sixty percent had incomes over $75,000 and 38% had household incomes of $100,000 or more. 14.1.4 Estimated Sales and Revenue DFW had total concession sales of $264 million in 2008, as shown in Table 14-1. The difference in passenger demographics is partly reflected in the spend rates in the terminals. Other factors, including size and location of concession space, passenger volumes, and the range of concessions offered, also affect spend rates. Table 14-2 shows the variation in food and beverage and retail spend rates by terminal. Terminal D functions as a domestic terminal for American Air- lines and as the major international terminal for the entire airport and handled 2.6 million enplan- ing international passengers in 2008, more than 95% of total international enplaned passengers. The international passengers drive higher retail spend rates. Terminal D produced sales per enplaned passenger that averaged 145% of the airport average. Duty free sales in Terminal D were $4.17 per international enplaned passenger in 2008. Sales per enplaned passenger by category are shown in Tables 14-2 and 14-3. DFW achieved sales per enplaned passenger of $8.39 on the core concessions of food and beverage and retail, as shown in Table 14-3. Table 14-1. Annual concession sales by category (Dallas/Fort Worth International Airport)â2008. Concession sales (m illions ) Net revenue to DFW (millions) Food and beverag e 145.0 $ â Spec ialty retail 66.9 â Convenience retai l 31.5 â Duty free 11.0 - â Advertising 10.2 - â Telephone, Wi-Fi n.a. â Ot her c oncession s n.a . â 264.6 $ n.a. Source: LeighFisher. Data from Airport Revenue News Fact Book 2009 (Airport Revenue News 2009).
14.1.5 Concessions DFW has the largest direct leasing concession program of any U.S. airport. The airport has more than 120 food and beverage locations and more than 100 retail shops. In each food category in food and beverage, there is a range of choices for travelers including familiar national brands and offerings from regional and local operators: â¢ American (9 concepts, 15 locations) â¢ Asian (2 concepts, 4 locations) â¢ BBQ (3 concepts, 6 locations) â¢ Cocktail Lounges (4 concepts, 7 locations) â¢ Coffee (2 concepts, 18 locations) â¢ Delis and Bakeries (6 concepts, 12 locations) â¢ Desserts and Snacks (7 concepts, 22 locations) â¢ Fast Foods (8 concepts, 21 locations) â¢ Grand Hyatt Dining (3 concepts, 3 locations) â¢ Italian (3 concepts, 4 locations) â¢ Mexican (6 concepts, 7 locations) The airport classifies its retail locations into the following: â¢ Accessories and Gifts â¢ Apparel â¢ Books and News â¢ Childrenâs â¢ Convenience Stores â¢ Duty Free â¢ Education/Language â¢ Home and Electronics â¢ Sports â¢ Tax Free and Texas Gifts Services offered at DFW include the following: â¢ ATMs â¢ FAX â¢ Western Union â¢ FedEx and U.S. Postal Service â¢ The Neat Company (scanners) 218 Resource Manual for Airport In-Terminal Concessions Table 14-2. Enplaned passengers, sales, and sales per enplanement by terminal (Dallas/Fort Worth International Airport)â2008. Table 14-3. Annual sales per enplanement (Dallas/Fort Worth International Airport)â2008. Terminal Enplaned passengers (millions) Share Concession sales (millions) Share Sales per enplaned passenger A B C D E 7.146 3.777 8.193 6.731 3.134 28.981 25% 13% 28% 23% 11% 100% $ 53.5 28.6 56.1 81.8 23.1 243.1 22% 12% 23% 34% 9% 100% 7.49$ 7.57$ 6.85$ 12.15$ 7.37$ 8.39$ Percent of airport average 89% 90% 82% 145% 88% 100% Source: LeighFisher. Data from Airport Revenue News Fact Book 2009 (Airport Revenue News 2009). Category Sales per enplanedpassenger Food and beverage 4.99$ Specialty retail 2.31 Convenience retail 1.09 8.39$ Duty free (1) 4.02$ (1) Per international enplaned passenger. Source: LeighFisher. Data from Airport Revenue News Fact Book 2009 (Airport Revenue News 2009).
Case Studies 219 â¢ free sponsored power outlets for portable devices â¢ Wi-Fi â¢ Samsung mobile travel lounge. Samsung also sponsors televisions located in holdrooms around the airport as part of a spon- sorship arrangement involving cash payments and equipment. Travel services include travel insurance and foreign currency exchange. Personal services concessions include barbershops, a salon, manicures and pedicures, massage chairs, massage therapists, and luggage carts. 14.1.6 Terminal Configuration DFW has five terminals, four of which are curvilinear (Terminals, A, B, C and E). All terminals are connected by the Skylink elevated train, which allows connecting passengers to transfer on the airside without having to exit the secure area. The curvilinear terminals present challenges for con- cessions, as the gates are single-loaded (gates on one side of the passenger concourse), resulting in longer distances between concessions. Terminal D has a unique configuration combining a curvi- linear curbside and a rectangular terminal building with two shopping streets located immediately beyond the two main security checkpoints. Terminal D also serves as the international terminal, with about 40% of its 6.7 million passengers departing on international flights. As a result, Termi- nal D is able to offer a larger concession program with extensive specialty retail space and achieves an average spend rate that is 145% of the overall airport average. The configuration of each termi- nal is shown in Figure 14-1. DFW has more than 223,000 square feet of concession space, as shown in Table 14-4. The air- port is implementing a terminal redevelopment plan that will improve the existing terminals and add concession space in accordance with its adopted planning standard of maintaining 8 to 10 square feet of concession space for every 1,000 enplaned passengers. When completed, the average space per 1,000 enplaned passengers will be near the total airport average, but space will be added to constrained Terminals A and C while space will be reduced in Terminal E, which has a surplus of supportable concession space relative to passenger traffic. 14.1.7 Commercial Strategy DFW serves an enormous market, but must also deal with some challenges. These challenges include a high percentage of connecting passengers, the size of the airport, and long distances between departure gates due to the curvilinear terminal. Figure 14-1. Dallas/Fort Worth International Airport terminal configuration. Terminal Area Plan Curvilinear Terminal (A, B, C, E) Terminal D â Domestic and International Source: DFWairport.com (As of October 12, 2010).
Connecting passengers make up more than half (57%) of enplaning passengers. Connecting passengers typically spend at a rate of about 60% of O&D passengers. In order to realize high aver- age sales, it is important to provide concessions close to the departure gates to serve time-sensitive connecting passengers. The size of the airport makes it challenging for some connecting passengers. For example, Amer- ican Airlines passengers are spread over Terminals A, C, and D. The airport built its Skytrain sys- tem to make it easier and faster for passengers to connect between terminals. There are two Skytrain stations in each terminal. The Skytrain system allows for faster concessions and more time for use of concessions. The curvilinear terminal has aircraft parked on only one side. Therefore, departure gates are dis- tributed over a wider distance than conventional, double-loaded terminals with aircraft on both sides of a pier or finger. This makes for longer walking distances, and, as the terminal is curved, it is difficult to see concessions around the bend. The airport is adding concession space around the Skytrain stations, which are heavily traveled by connecting passengers and which are also located opposite the major security checkpoints. Thus, the areas around the Skytrain stations are exposed to large concentrations of both connecting and O&D passengers and are the most desirable area in which to cluster concessions. The DFW Board has a policy of encouraging ACDBE participation, and the airport has one of the largest ACDBE programs in the nation. The direct leasing program provides numerous oppor- tunities for small, local, independent businesses to compete for concession privileges. In addition, larger packages include ACDBE goals to encourage subleasing. Overall minority business goals, including ACDBE goals, are approximately 35% as a percentage of sales. This goal is regularly surpassed. DFW minority concession sales account for more than half of total concession sales. The concession program is an important part of DFWâs overall brand strategy. 14.1.8 Key Concessionaires Food and beverage concepts include Au Bon Pain, Auntie Anneâs, Ben & Jerryâs, Benniganâs, Blue Mesa CafÃ©, Burger King, Camilleâs Sidewalk CafÃ©, Cantina Laredo, Champps, Chiliâs, Cool River, Cousinâs Barbecue, Dickeyâs BBQ, Dunkin Donuts, Freshenâs Yogurt, Manchu Wok, McDonaldâs, Pizza Hut, Popeyeâs Chicken, Starbucks, Subway, Taco Bell, TGI Fridayâs, The Grove, Varsity Grill, and Wendyâs, among others. Retailers include Airport Wireless, Bijoux Terner, Borderâs Newsstand, Brighton, Brooks Broth- ers, Brookstone, Official Dallas Cowboys Pro Shop, DFW Travel Mart, Fossil, Hudson Booksellers, InMotion Pictures, Jethro Pugh Shops, Johnston & Murphy, La Bodega Winery, Landau, LâOccitane, Natalieâs Candy, PGA Tour Shops, Simply Books, Starbucks, Rosetta Stone, Sue Venier, Techshowcase, and Z Market, among others. 220 Resource Manual for Airport In-Terminal Concessions Table 14-4. Concession space by terminal (Dallas/Fort Worth International Airport)â2008. Enplanements (millions) Concession space (sq ft) Space per 1,000 Enplanements Terminal A 7.1 45,129 6.3 Terminal B 3.8 34,035 9.0 Terminal C 8.2 42,373 5.2 Terminal D 6.7 60,788 9.0 Terminal E 3.1 40,812 13.0 29.0 223,137 7.7 Source: LeighFisher. Data from Airport Revenue News Fact Book 2009 (Airport Revenue News 2009).
Case Studies 221 High-end branded vending machines are operated by Zoom Systems and include Body Shop, Proactive Facial Care, Sephora, and Best Buy Express. Duty free is operated by Buckaroo Duty Free. 14.1.9 Unique Concessions and Innovations Mobile Technology DFW has developed a mobile website (www.dfwairport.com/mobile) that offers travelers access to different tools, including an application that suggests concessions nearest to each gate. Working with Sabre, DFW has taken it a step further so the users of the TripCase app (www.tripcase.com) can receive special promotions on their iPhone or Blackberry from the airportâs concessionaires based on their terminal location. Market Research DFW is an innovator in the use of market segmentation. DFW has employed Buxton, a market research consultancy, to conduct demographic research using Nielsenâs Claritas market demo- graphic identification and segmentation system. By capturing the zip codes of its originating and connecting passengers, DFW is able to segment its passengers into 63 distinct lifestyle groups that identify shopping and media preferences as well as key demographic and socioeconomic charac- teristics. Lifestyle groups are also characterized by urban density into four groupsâurban, sub- urban, town and rural, and second cityâand further classified according to socioeconomic rank and âlifestageâ group, based on the presence and age of children. DFW has identified what are considered core passenger segments for local originating customers and core passenger segments for customers making a connection at the airport. This information is useful in determining buying preferences and behaviors like brand loyalty, quality merchandise, functionality, and mix of concepts. As an example, DFW was able to tell its food and beverage con- cessionaire which brands of beers were most popular with its key segments. The brands identified through the market segmentation analysis were considerably different from the brands currently on offer. DFW uses the market segmentation data in identifying trends, brand preferences, prod- uct preferences, and gaps in the current concession program. Eight core passenger segments were identified and described for local originating customers, as shown in Figure 14-2. Other segments were identified but not selected for individual recognition. Figure 14-2. Dallas/Fort Worth International Airport core O&D passenger market segments. Dream Weavers 21% New Suburbia Families 17% Young Cosmopolitans 10% Small-town Success 7% Urban Commuter Families 5% America's Wealthiest 5% Prime Middle America 4% Second- generation Success 3% O ther segments 28% Source: Dallas/Fort Worth International Airport. Classifications based on Buxton Customer ID profiles, September 2009.
The top three segments above make up 48% of the local originating passengers. Dream Weavers are characterized as affluent, living the suburban version of the American Dream. They are well- off families with school age children. New Suburbia Families are young with pre-school chil- dren. They are working couples and are concentrated in fast-growing metro-fringe communities. The third group, Young Cosmopolitans, consists of college educated, young singles earning upper-middle-class incomes as white-collar professionals, managers, and executives. These resi- dents live in luxury apartments and condominiums in fast growing cities. Fourteen core passenger segments were identified for customers making a connection at DFW, as shown in Figure 14-3. The fourteen include all the passenger segments listed above. Thirty-one percent of the customers represent âOtherâ segments not identified. Along with the top three core passenger segments for originating passengers, the connecting audience has three additional top segmentsâUrban Commuter Families, Prime Middle America, and Steadfast Conservatives. Urban Commuter Families are college-educated Baby Boomers and couples living upscale lifestyles in city neighborhoods on the metropolitan fringe in comfortable, single, detached homes. Prime Middle America is a core passenger segment composed of a mix of young, upper-middle-class couples and families living in both small towns and mid-sized cities. Residents work in white-collar and blue-collar jobs that are well paying. The third ranking segment is the Steadfast Conservatives. These residents live in middle-class urban blue-collar neighborhoods and are mature singles and couples that are high school educated. Sponsorships In addition to the arrangement with Samsung, DFW was the first airport to enter into an exclusive sponsorship arrangement for soft drinks with the local Pepsi bottler. Concessions at the airport sell Pepsi products exclusively. The airport receives sponsorship payments. 14.2 San Francisco International Airport 14.2.1 Ownership/Governance San Francisco International Airport (SFO) is an enterprise fund department of the City and County of San Francisco. It is entirely self-sufficient. It is governed by a five-member Airport 222 Resource Manual for Airport In-Terminal Concessions Figure 14-3. Dallas/Fort Worth International Airport core connecting passenger market segments. Dream Weavers 9% New Suburbia Families 8% Urban Commuter Families 7% Prime Middle America 7% Steadfast Conservative 7% Small-town Success 6% Stable Careers 6% Young Cosmopolitans 5% America's W ealthiest 3% M inority Metro Communities 3% Status-conscious Consumers 2% Professional Urbanites 2% Latino Nuevo 2% Affluent Urban Professionals 2% Other segments 31% Source: Dallas/Fort Worth International Airport. Classifications based on Buxton Customer ID profiles, September 2009.
Case Studies 223 Commission whose members are appointed for 4-year terms by the Mayor. In accordance with the City Charter, the Commission is primarily a policy-making body that establishes SFOâs operating policies. Major contracts longer than 5 years or with revenue or expenses above a certain limit are subject to approval by the Cityâs Board of Supervisors. The day-to-day respon- sibility for operation of the Airport is vested in the Airport Director, who is appointed by the Mayor. 14.2.2 Traffic Overview SFO handled 18.5 million enplaned passengers in 2009 and ranked tenth in the United States and twentieth in the world. It is the second-largest commercial service airport in California after Los Angeles International, handling 18% of the stateâs domestic passengers and 32% of its inter- national passengers. SFO is served by 51 scheduled airlines and in 2009 handled 363,034 scheduled passenger airline operations. The airlines serve 73 non-stop domestic destinations, with 34 additional one-stop destinations. United Airlines (including SkyWest Airlines and United Express) han- dles the largest share of traffic (41%), followed by American Airlines (including American Eagle) (9.2%), and Delta Air Lines (including SkyWest Airlines, Express Jet Airlines and Mesaba Airlines) (4.9%). Twenty-eight international passenger airlines provide nonstop scheduled service to over 30 international destinations, with one-stop service to an additional 22 destinations. In recent years, the Airport Commission has made a concerted effort to attract additional low-cost airlines service. Today, 22% of domestic enplaned passengers are carried on low- cost carriers including AirTran, Southwest, and Virgin America, which has its operations base near the airport. SFO is the dominant airport in the San Francisco Bay Area, handling a 66% share of total passenger traffic. The other one-third is handled by San Jose and Oak- land airports. 14.2.3 Passenger and Market Characteristics SFO is predominately an O&D airport, with 77% of its passengers beginning or ending their trip at SFO. Approximately 78% of passengers are domestic. The destination of passengers by world region is shown in Figure 14-4. SFO passengers are predominately leisure and business travelers, as shown in Figure 14-5. Canada 3% Asia/ Middle East 10% Australia/Oceania 1% Domestic 78% Mexico/Caribbean/ Central America 2% Europe 6% Source: San Francisco Airport Commission 2009, p. 20. Figure 14-4. Destination of passengers. Figure 14-5. Reason for travel. Leisure 39% Business 29% Other 10% Visiting Friends and Relatives 22% Source: San Francisco Airport Commission 2009, p. 20.
14.2.4 Estimated Sales and Revenue Total concession sales by category for SFOâs domestic and international terminals are sum- marized in Table 14-5. Sales and revenue per enplaned passenger at SFO are summarized in Table 14-6 below. SFO sales averaged $11.70 per enplaned passenger for combined food and beverage, specialty retail, and convenience retailâthe third highest average amount in the United States (after Pittsburgh and New York Kennedy Airports). SFOâs overall food and beverage sales per enplane- ment are the highest in the nation. The airport received net revenue of $1.62 per enplaned passenger from food and beverage, specialty retail, and convenience retail sales. International enplaning passengers spent an average of $15.27 in duty free shops, which provided net revenue to the airport of $4.06 per international enplaned passenger. Advertising sales of $0.53 produced net revenue of $0.37 net per enplaned passenger. 14.2.5 Concessions At SFO, Food and beverage concessions include 65 units, 27 concessionaires, and 75,500 square feet of space. Food and beverage concessionaires include D-Lew Enterprises, which operates cafes 224 Resource Manual for Airport In-Terminal Concessions $ Domestic Terminals International Terminal Total Sales Revenue to Airport Food and Beverage Convenience Retail Specialty Retail Subtotal Duty Free Passenger Services n.a. n.a. n.a. n.a. n.a. n.a. Advertising Currency Exchange 98.0$ 21.3 56.0 175$ .3 1.4$ 176.7$ $ 28.8$ 12.6 25.7 67$ .1 66.9$ 134.0 126.8$ 33.9 81.7 242.4 68.3$ 36.0 9.8 0.1 356.6$ $ 11.9 7.0 11.2 30.1 â 3.8 6.9 0.1 40.9$ Source: LeighFisher. Data from Airport Revenue News Fact Book 2009 (Airport Revenue News 2009). Table 14-5. SFO concession sales and revenueâ2008 (millions). Table 14-6. SFO sales and revenue per enplanement by category for domestic and international terminalsâ2008. Domestic Terminals Domestic Terminals Inter national Terminal Food and Bev erage Convenience Retail Specialty Retail Subtotal Pa ss enger Servic es Ad ve rti si ng Currency Exchange Duty Free (per In'l enplane) 7.24 $ 1.57 2.24 11.05$ n.a. n.a. n.a. 11.05$ 2.25 $ International Terminal 5.77 $ 2.52 5.14 13.43$ n.a. n.a. n.a. 13.43$ 17.39 $ Total Sales $ 6.85 1.83 3.02 11.70 $ 1.94 $ 0.53 0.01 14.18 $ 15.27 $ 0.72 $ 0.29 0.36 1.37 $ n.a. n.a. n.a. 1.37 $ 0.58 $ 0.42 $ 0.60 1.26 2.28 $ n.a. n.a. 0.02 2.30$ 4.63 $ Total 0.64 $ 0.38 0.60 1.62 $ 0.21 $ 0.37 0.00 2.20$ 4.06 $ Sales per Enp lan ement Revenue per Enplanement Source: LeighFisher. Data from Airport Revenue News Fact Book 2009 (Airport Revenue News 2009).
Case Studies 225 and two successful casual dining restaurants; the Bay Area Restaurant Group; Bayport Concessions; Boudin Sourdough bread; Gotham Enterprises, which operates several Firewood CafÃ©s and Peetâs coffee kiosks; and local restaurants Andale, Ebisu, Osho, Sankaku, and San Francisco Soup Com- pany. SSP America and HMS Host also operate at SFO, combining for about 22% of the total food and beverage space. Retail at SFO includes 76 locations, 23 concession agreements, and 77,900 square feet of space. Convenience retail is operated by HMS Host, Hudson News, Pacific Gateway, and Paradies Shops. Local bookseller, Books, Inc., operates a major bookstore in Terminal 3 and will open one in the new Terminal 2. Specialty retail operators include Airport Wireless, Brookstone, B-zinc, Erwin Pearl, Ghirardelli Chocolates, Hudson Booksellers, InMotion Entertainment, MNG by Mango, Pacific Outfitters, San Francisco Museum of Modern Art (MOMA) Shop, Sunglass Hut, Techshowcase, and Tumi Luggage, among others. Duty free at SFO includes 11 locations, one concession agreement, and 30,700 square feet of space. The duty free concessionaire is DFS Group, which operates two main shops totaling 22,000 square feet, as well as Coach and Gucci branded boutiques, two branded duty free kiosks, and two smaller âlast chanceâ shops. DFS also either operates or subleases all post-security retail spaces, many of which are subleased to ACDBEs, including Pacific Gateway, which operates all of the post- security newsstands. DFS also operates two pre-security Sephora shops. Services at SFO include checkpoint mailing facilities; a travel agency; a full-service banking cen- ter; laptop workstations; a hair salon; spas; a pharmacy; and a medical clinic that provides travel medicine, urgent care, immigration physicals, and occupational health services. The airport offers free Wi-Fi, which was formerly operated as a concession. Other amenities include family rest- rooms and showers. The SFO Kidsâ Spot play area features interactive attractions for the Exploratorium of San Francisco. Travelex America, Inc., provides currency exchange and ATM services. Express Spa operates two locations. Clear Channel Airports is the advertising concessionaire at SFO. 14.2.6 Terminal Configuration The airport has four terminal buildings. Terminal 1 was built in the 1970s and has limited post- security space and an excess of pre-security concession space. Terminal 2, the oldest terminal at the airport, is undergoing a $380 million reconstruction and will provide 14 additional domestic gates. The terminal opens in 2011 and will handle American Airlines and Virgin America, which is grow- ing its San Francisco schedules. Terminal 2 is discussed later in this section. Terminal 3 handles a majority of the airportâs total passenger traffic. Concession space is almost entirely post-security. The International Terminal has 23 wide body gates on two concourses, each with its own security checkpoint. Arriving passengers in Terminal 3 can connect to one of the two concourses at the International Terminal through a secure connector, eliminating the need for an additional secu- rity inspection. The configuration of the four terminals is shown in Figure 14-6. Table 14-7 summarizes concession space by category, and Table 14-8 summarizes concession space per 1,000 enplaned passengers. Space in the domestic terminals is somewhat constrained, as the average of 6.2 square feet per 1,000 enplaned passengers includes considerable pre-security space in Terminal 1, which is of marginal utility. The airport is considering a series of improve- ments to increase the amount of concession space in Terminal 3, used by United Airlines, which has the highest spend rates on the airport.
14.2.7 Commercial Strategy SFO has adopted a strategy to be the âairport of choiceâ for the Bay Area, which includes a focus on providing a quality customer experience. The airport utilizes the direct leasing approach and has one of the largest direct leasing programs in the United States. SFO has favorable demographics for concessions, including passenger incomes higher than state and national averages; a mix of long-haul international passengers (22%); a large number of inbound and outbound leisure passengers, including tourists visiting San Francisco; and domestic long-haul passengers, including transcontinental and Hawaii passengers. The airport views food and beverage as an essential customer service with quality and value tak- ing precedence over revenue. Beginning in the late 1990s with the development of the concession program in the International Terminal (which opened in 2001), the airport made a major effort to attract local restaurateurs. Because it was a new terminal, the concessions at the International Ter- minal were not under the exclusive rights of the then-current master food and beverage agreement. The Airport Commission employed a developer to develop the food and beverage services based on (1) attracting local restaurants offering âthe best of San Franciscoâ and (2) lowering the rent structure for food and beverage in recognition of the cost structure of smaller lease packages and the relatively high labor and other operating costs typical of the Bay Area. The program was a suc- cess, and a similar strategy was adopted for the domestic terminals in 2005 and implemented by the airport, with local businesses winning 80% of the spaces. ACDBEs won a 70% share. The local 226 Resource Manual for Airport In-Terminal Concessions Table 14-7. SFO concession space by category (square feet)â2008. Table 14-8. SFO concession space per 1,000 enplaned passengers (square feet)â2008. Figure 14-6. SFO terminal configuration. Source: Flysfo.com (As of October 10, 2010). International TerminalTerminal 1Terminal 2 (opens 2011) Terminal 3 Domestic Terminals International Terminals Percent by category Food and Beverage 51,517 23,983 75,500 41% Specialty Retail 26,265 31,187 57,452 31% Convenience Retail 10,745 8,712 19,457 11% Duty Free 470 30,216 30,686 17% Total 88,997 94,098 183,095 100% Source: LeighFisher. Data from Airport Revenue News Fact Book 2009 (Airport Revenue News 2009). Domestic Terminals International Terminals Averageâall airports Food and Beverage 3.6 5.8 4.1 Specialty Retail 1.8 7.5 3.1 Convenience Retail 0.7 2.1 1.0 Duty Free 0.0 7.3 1.6 Average per terminal 6.2 22.6 9.8 Source: LeighFisher. Data from Airport Revenue News Fact Book 2009 (Airport Revenue News 2009).
operators have proven popular, with food and beverage sales per enplaned passenger increasing by 40% immediately after the transition from the master concessionaire to the predominately local program. Since this program was implemented, the airport has had the highest food and beverage sales per enplaned passenger in the United States. 14.2.8 Unique Concessions and Innovations New Terminal 2 In September 2008, SFO broke ground on a $383 million project to renovate Terminal 2 in order to accommodate growth in passenger traffic and airline demand for gates. This state-of- the-art, environmentally friendly domestic terminal is expected to open in the second quarter of 2011. Terminal 2 will have capacity for 5.5 million annual enplaned passengers and will handle a projected 3.2 million enplaned passengers in its first year of operation. Terminal 2 will have 14 gates expected to serve predominantly narrow-body aircraft, but with the capability of accommodating a Boeing 747-400 sized aircraft. Terminal 2 will feature nearly 30,000 square feet of retail development, including restaurants, retail stores, and a gourmet marketplace and serve American Airlines and Virgin America. The new concessions program fea- tures 29,909 square feet of retail development, including 12 eating establishments and a retail street traveled by all departing and arriving passengers (see Figure 14-7 for the Terminal 2 con- cession plan). Key elements of the plan include the following: â¢ Napa Farms Market will feature a cheese counter, a bakery, a wine bar, and possibly locally grown fresh fruit and vegetables. â¢ Vegan, organic, and gluten-free selections will be featured at The Plant CafÃ© Organic, a counter service location. â¢ Health-conscious Northern California dishes will be highlighted at The Grill by Lark Creek, a table service restaurant. This will also be the first airport dining terminal in the United States to offer a âslow foodâ focus, meaning it will be approved by Slow Food USA. â¢ Four other quick-serve locations, a bar/lounge, and two specialty coffee locations are integrated with common holdroom seating areas, offering a range of seating options with amenities includ- ing power outlets. The seating types are intended to encourage passengers to eat and drink near the departure gates. â¢ Eight specialty retail shops will offer fashion and accessories, artwork and collectibles, jewelry and accessories, books, chocolates, premium souvenirs, technology, and travel accessories. Health and Environmental Policy New food vendors are encouraged to comply with a 16-point health and environmental policy including use of the following: appropriate portion sizes, visible food preparation areas, low- or no-phosphate detergents, organic agricultural products from the Northern California region, and sustainable seafood and products. Sustainability Sustainable design elements figure prominently. The airport is seeking LEED Silver certification for Terminal 2 and expects concessionaires to meet this standard also. 14.3 Tulsa International Airport 14.3.1 Ownership/Governance Tulsa International Airport (TUL) is owned by the City of Tulsa, Oklahoma. It is operated by the Tulsa Airport Authority (Authority), a charter authority of the City established to administer, Case Studies 227
228 Resource Manual for Airport In-Terminal Concessions Figure 14-7. Terminal 2 concession plan. Source: San Francisco Airport Commission 2009, p. 20.
manage, and operate TUL and Riverside/Richard Lloyd Jones, Jr. Airport. The Authorityâs policy-making body is a five-member Board of Trustees (Board), known as the Tulsa Airport Improvements Trust (TAIT). The Mayor and four qualified voters of the City of Tulsa make up the Board. 14.3.2 Traffic Overview TUL ranked 74th in enplaned passengers in 2009. The airport reported nearly 1.6 million enplaned passengers. Traffic has been declining slightly since the peak year of 2001. TUL boasts non-stop service to 15 cities in the United States and is served by American Air- lines, Continental, Delta, Southwest, and United. Southwest has the largest market share with almost 34% of enplaned passengers, followed by American Airlines with 26% and Delta Air Lines with 15%. 14.3.3 Passenger and Market Characteristics TUL is an origin and destination (O&D) airport. Almost all of its passengers are domestic arriv- ing and departing passengers. Connecting passengers are less than 1% of the total. According to the airportâs most recent survey of arriving and departing passengers, conducted in April and May of 2010, respondents were 54% male and 46% female. A little over half of them, 51%, were under age 40, and 49% were over age 40. 14.3.4 Estimated Sales and Revenue According to a recent Tulsa World article, passenger revenue from restaurants, newsstands, and gift shops has nearly doubled at TUL in the past 10 years to $10.2 million. Sales per enplaned pas- senger in 2008 were $6.40, nearly twice the $3.33 per enplaned passenger a decade ago (Stewart 2010). Table 14-9 summarizes gross and net revenue and gross and net revenue per enplaned pas- senger, as well as concession space and space per 1,000 enplaned passengers by category. TULâs sales per enplaned passenger increased sharply after the terminal reconfiguration and development of the new concession program. From 2004 to 2008, TULâs sales per enplaned pas- senger increased by 78%, more than twice as fast as the rate of growth of airports with annual enplaned passengers between 1 million and 2 million, which grew by 38% over this period. 14.3.5 Concessions For the second year in a row, TULâs concession program was ranked one of three âamong the bestâ for food and retail services in the small airport category by a recent J.D. Power and Associ- ates airport passenger satisfaction study. Case Studies 229 Table 14-9. Sales, revenue, and space (Tulsa International Airport)â2008. Food and Beverage Specialty Retail Convenience Retail Sales ) (millions 5.540$ 1.565 3.084 10.189$ Sales per enplanement $ 3.48 0.98 1.94 6.40$ Revenue (millions) $ $ $ 0.589 0.219 0.376 1.184$ Revenue per enplanement $ $ $ 0.37 0.14 0.24 0.74$ Space (sq ft) 14,500 4,000 5,200 23,700 Space per 1,000 Enplanements 9.1 2.5 3.3 14.9 Source: LeighFisher. Data from Airport Revenue News Fact Book 2009 (Airport Revenue News 2009).
Food and beverage concessionaire and concepts include the following: HMS Host (Camilleâs; Cherry Street Grill; Starbucks; TGI Friday; Varsity Grill). Retail concessionaire and concepts include the following: The Paradies Shops (Explore Tulsa; Novel Idea Bookstore; Cherry Street Travel Mart; CNBC News; Green Country Marketplace). A full-service hair salon/barbershop is on the upper level of the center terminal, pre-security. There are pay phones throughout the terminal and shoeshine service on both concourses near the airline gates. ATM machines are located pre-security, near the security checkpoint and ticketing lobby, and post-security in Concourses A and B. For those requiring business services, TUL fea- tures a series of meeting rooms located throughout the terminal, which are available for rent. There is free Wi-Fi service for AT&T customers who have Wi-Fi included in their AT&T plans. Others can purchase r a 24-hour Wi-Fi session. Advertising concessionaire: Interspace Advertising. 14.3.6 Terminal Configuration Unlike most terminals, the Tulsa airport terminal has a split roadway with departures curbside on the lower level and arrivals curbside on the upper level. There are two departure concourses with a single, central security checkpoint. From the security checkpoint passengers enter a long connecting corridor overlooking the aircraft ramp connecting the two concourses. Concessions are on one side of the connector. There are additional food and beverage and retail concessions on the concourses. The terminal configuration is shown on Figure 14-8. 14.3.7 Commercial Strategy The Authorityâs commercial strategy, implemented over several years, has had multiple ele- ments including the following: â¢ Reconfiguring and remodeling the terminal building â¢ Creating a single security checkpoint that consolidated two separate departing passenger flows 230 Resource Manual for Airport In-Terminal Concessions Figure 14-8. Terminal layout (Tulsa International Airport). Source: Tulsa Airport Authority. http://www.tulsaairports.com/index. cfm?id=20. Accessed November 10, 2010.
â¢ Developing more post-security space to take advantage of the consolidated passenger flow â¢ Emphasizing local brands and, in particular, local events to create a sense of place Before the recent terminal addition, the airport had two security checkpoints at the entrance to each concourse. Adjacent to the checkpoints were small, traditional news/gift shops. Food and bev- erage services, including a self-service cafeteria and a small bar, were located in the center of the terminal out of the departing passenger flows. After security, each concourse had a combination quick-service restaurant with an adjacent bar, and a news/gift shop, as well as a kiosk or additional in-line specialty retail unit. The airport recognized an opportunity to expand the concession program when it undertook a project to enclose new space at the apron side of the terminal between the two concourses to accom- modate in-line baggage screening equipment on the ground level. By enclosing the space above the addition, a concession mall was created that featured a window wall overlooking the airfield on one side and concessions on the other. The two checkpoints at entrances to the concourses were consol- idated into a single checkpoint in the center of the terminal, creating a single passenger flow into the concession area. The single passenger flow, by consolidating passengers, was the key to adding the additional terminal locations and providing sufficient passenger volumes to support the individual units. Figure 14-9 presents a view of the post-security connector and concession mall. Near the time that the terminal development was being planned, the existing single, long-term master concession agreement was expiring, which allowed the Authority to award new concession contracts. A new concession plan was developed, and a contracting strategy was developed. One retail agreement and one food and beverage agreement were awarded. Each contract encouraged subleasing with local brands or licensing local brands to add local flavor to the program. TULâs sales per enplaned passenger increased sharply after the terminal reconfiguration and development of the new concession program. From 2004 to 2008, TULâs sales per enplaned pas- senger increased by 78%, more than twice as fast as the rate of growth of airports with enplaned passengers of 1 million to 2 million, which grew by 38%. The program also had a major effect on the perception of the airport and the terminal. 14.3.8 Unique Concessions and Innovations Recycling All trash generated at the TUL terminal and satellite facilities are sent to an âenergy from wasteâ facility. There, the trash is burned and the steam is recaptured and converted to electrical Case Studies 231 Figure 14-9. Post-security connector and concession area (Tulsa International Airport).
energy, which is sold to area refineries. This reduces the Airportâs landfill usage by 90%. Coffee grounds from Starbucks are used by grounds crews for compost and the airportâs ornamental flower gardens. Sense of Place Like many airports, TUL made a concerted effort to create a theme that conveyed a sense of place or destination. TUL, however, distinguished itself by selecting a theme that is a continuous cele- bration of the communityâs eclectic events. The themes evolved from extensive community involvement, many meetings, and other opportunities for input into their development. TUL held a concession fair a year in advance of the due date for proposals for the concession opportunities. The advance notice provided interested parties with the opportunity for teaming, researching, and developing their proposals and creating a plan for delivering the unique require- ment for a revolving sense of place. Interest in the program was very high, and TUL is quite pleased with the results following the competitive award of the concession privileges. Food and retail operators refresh their units 12 times a year to reflect the event being celebrated or promoted, such as golfing events, basketball tournaments, May Fest, and others. The TUL mar- keting group creates the themes and, in some instances, generates additional revenue for the air- port in the process. Renting space for products being offered at an event or promoting an event has been profitable for TUL. 14.4 Portland International Airport 14.4.1 Ownership and Governance Portland International Airport (PDX) is governed by the nine-member Port of Portland Commission, which is appointed by the Governor of Oregon and ratified by the Oregon Sen- ate. Commissioners serve a 4-year term and can be reappointed. At least two of the Commis- sion members must live in each one of the three counties in the Port district. The remaining members may live in any part of the State of Oregon. The Commission appoints the Portâs Executive Director. The Aviation Director is hired by the Portâs Executive Director. The Aviation Director is respon- sible for overseeing the day-to-day management of the Airport and for the planning, development, and implementation of airport projects. 14.4.2 Traffic Overview In 2009, PDX was the 30th busiest airport in the United States based on passenger board- ings, with 6.4 million enplaned passengers. PDX is served by 13 airlines with direct service to many domestic locations, as well as locations in Canada, Mexico, the Netherlands, and Japan. The airport is a major hub for Alaska Airlines and Horizon Air, as well as for the United Express affiliate, SkyWest Airlines. In addition, Seaport Airlines, a regional carrier, is head- quartered at PDX. 14.4.3 Passenger and Market Characteristics Approximately 86% of the airportâs passengers begin or end their trip at PDX. Because it is the primary airport in Oregon and is close to Portland, which is Oregonâs most populated city, the air- port serves a large majority of the stateâs air travelers. The Airport Revenue News Fact Book 2009 shows that the ratio of business to leisure travelers is 32/58 (Airport Revenue News 2009. 232 Resource Manual for Airport In-Terminal Concessions
The U.S. Census Bureau State and County Quick Facts show that Oregon has a population of approximately 3.8 million people (U.S. Census Bureau 2010). Approximately 64% of the stateâs population is between the ages of 18 and 64. The median household income in Oregon is approx- imately $50,000. 14.4.4 Estimated Sales and Revenue Total in-terminal concession sales and net revenue to the airport totaled $74.7 million in 2008, as shown in Table 14-10. PDX had approximately 300,000 enplaning international passengers in 2008, of which approx- imately 200,000 used Terminal D. Table 14-11 shows the variation in food and beverage and retail spend rates by terminal, excluding duty free. The terminal with the most international passengers had the highest spend rate among the airportâs five concourses. The airport achieved average sales per enplaned passenger in 2008 of $10.44, the fifth highest of all U.S. airports reporting data to ARN for 2008, behind Pittsburgh International Airport, New York John F. Kennedy International Air- port, San Francisco International Airport, and Newark Liberty International Airport. PDX ranked second after Pittsburgh International Airport among medium hub airports. Case Studies 233 Table 14-10. Annual concession sales by categoryâ2008. Sales (millions) Food and beverage Specialty retail Convenience retail Totals $ 40.4 18.2 16.1 $ 74.7 Net revenues (millions) $ $ 4.3 2.1 2.2 8.6 Source: LeighFisher. Data from Airport Revenue News Fact Book 2009 (Airport Revenue News 2009). Terminal Area Domestic International Total Share Sales Share Sa les per enplaned p assen g e r Concourse A 1 ,101,269 49,791 1, 151,060 16.1 % $ 3,130,509 4.2% $ 2.72 Concourse B 3 11,713 311,713 4. 3% 829,347 1.1% $ 2.66 Concourse C 3 ,124,377 12,278 0 3, 136,655 43.9 % 17,478,880 23.4 % $ 5.57 A, B, C Common Areas â 8,962,163 12.0 % $ 1.95 Total Termina l 4 ,537,359 62,069 4, 599,428 64.3 % $ 30,400,899 40.7 % $ 6.61 Concourse D 1 ,279,500 204,015 1, 483,515 20.7 % $ 8,565,299 11.5 % $ 5.77 Concourse E 1 ,022,817 45,097 1, 067,914 14.9 % 3,440,664 4.6% $ 3.22 D and E Common Areas â â â â â â â 1,149,366 1.5% $ 0.45 D,E Total s 2 ,302,317 249,112 2, 551,429 35.7 % $ 13,155,329 17.6 % $ 5.16 Total - Post Securit y 6 ,839,676 311,181 7, 150,857 100.0 % $ 43,556,228 58.3 % $ 6.09 Bag Clai m - - - - 7, 150,856 100.0 % $ 909,693 1.2% $ 0.13 Main Terminal (Oregon Market ) - - - - 7, 150,857 100.0 % $ 30,203,529 40.4 % $ 4.22 Total - Pre Securit y - - - - 7, 150,857 100.0 % $ 31,113,222 41.7 % $ 4.35 Grand Tota l - - - - 7, 150,857 100.0 % $ 74,669,450 100.0% $ 10.44 Food and beverage and retail sales En planed pa sse ngers Source: LeighFisher. Data from Airport Revenue News Fact Book 2009 (Airport Revenue News 2009). Table 14-11. Enplaned passengers, sales, and sales per enplaned passenger by terminal area (Portland International Airport)â2008.
The Oregon Market is located after the ticket counters and before the security checkpoints and features many local, regional, and national concepts. PDX has instituted a street pricing policy for its food/beverage and retail concessions. Sales at PDX are tax free, as Oregon is one of the few states in the nation that does not impose a sales tax. 14.4.5 Concessions PDX offers a wide range of pre-security and post-security dining and retail shopping and serv- ices options. There are 36 food and beverage units with 21 different concepts. Food and beverage concessions include Baskin Robbins; Beachâs Restaurant and Bar; Beaverton Bakery; Big Town Hero; Capers CafÃ©; Coffee People; Flying Elephant Deli; Good Dog, Bad Dog; Gustavâs Pub and Grill; Jamba Juice; Laurelwood Brewing Co.; Panda Express; Pizza Schmizza; Pizzicato; Riverfront CafÃ©; Rogues Ales Public House; Roseâs Restaurant and Bakery; Sandovals Fresh Mexican Grill; Stanfordâs Restaurant and Bar; Starbucks; and Wendyâs. There are 32 retail units with 15 different concepts. Retail concessions include Aria Boutique, Brookstone, cc McKenzie Shoes and Apparel, Columbia Sportswear, Creative Kidstuff, Hudson News, InMotion Entertainment, Made in Oregon, Nike, Oregon Pendleton Shop, Powellâs Book Store, Real Mother Goose, Rosetta Stone, Spirit of the Red Horse, and Your Northwest Travel Mart. Services include a bank with ATMs throughout the terminal (US Bank), a barbershop (The Barbers), two business service centers (Travelex), the Oregon Lottery, luggage carts (Smarte Carte), two full-service spas (The Dragontree Spa), and free Wi-Fi. In-terminal advertising is provided through Alliance Airport Advertising. 14.4.6 Terminal Configuration PDX has an H-shaped terminal with five concourses (see Figure 14-10). The south side con- courses (A, B, and C) are connected to the north side concourses (D and E) beyond PDXâs two security checkpoints by an elevated walkway that opened in August 2005. The Oregon Market, with its many restaurants and shops, is located behind the airline ticket counters and is accessible to passengers and visitors alike. Concourse A contains five gates and Concourse B contains three gates, all of which are on the south side of the terminal. The 23 gates in Concourse C occupy both sides of the concourse, thus providing the concessions on the concourse with exposure to passengers at more gates. Concourses D and E are on the north side of the terminal. Concourse D includes 15 gates, which, like Concourse C, are situated on both sides of the concourse. Concourse E includes seven gates on the north side of the concourse only. PDX has almost 77,000 square feet of food and beverage, convenience retail, and specialty retail concession space, as shown in Table 14-12. 14.4.7 Commercial Strategy PDX has long been considered an innovator and leader in terms of concession program quality and performance. Beginning with its flagship Oregon Marketplace development in 1988, the Port of Portland used its concession program as a way of differentiating the airport from others, creat- ing an identity that reflected the local community, and incorporating established local food and beverage concepts such as Beaverton Bakery, Pizza Schmizza, Laurelwood Public House and 234 Resource Manual for Airport In-Terminal Concessions
Case Studies 235 Source: Port of Portland. Figure 14-10. Terminal layout (Portland International Airport). Table 14-12. Concession space and concession space per 1,000 enplaned passengers by terminal area (Portland International Airport)â2008. Food and Beverage Specialty retail Convenience retail Total square feet Concourse A 1,944 â 435 2,379 1,151,060 2.1 Concourse B 215 â 389 604 311,713 1.9 Concourse C 11,132 2,850 1,382 15,364 3,136,655 4.9 A, B, C Common Areas 3,847 983 1,150 5,980 1.3 Total Terminal 17,138 3,833 3,356 24,327 4,599,428 5.3 Concourse D 5,702 1,544 2,039 9,285 1,483,515 6.3 Concourse E 2,826 â 700 3,526 1,067,914 3.3 D and E Common Areas 855 â â 855 0.3 D,E Totals 9,383 1,544 2,739 13,666 2,551,429 5.4 Total - Post Security 26,521 5,377 6,095 37,993 7,150,857 5.3 Bag Claim 485 â 485 970 7,150,857 0.1 Main Terminal (Oregon Market) 23,947 12,169 1,830 37,946 7,150,857 5.3 Total - Pre Security 24,432 12,169 2,315 38,916 7,150,857 5.4 Grand Total 50,953 17,546 8,410 76,909 7,150,857 10.8 Food and beverage and retail square feet Terminal Area Enplaned passengers Square feet per 1,000 enplaned passengers Source: LeighFisher. Data from Airport Revenue News Fact Book 2009 (Airport Revenue News 2009).
Brewery, and local retail brands. Locally based national brands, such as Nike, Norm Thompson, and Columbia sportswear, are prominent. Concession design is coordinated with design of the surrounding terminal areas to create a cohe- sive and inviting visual appearance. Stores are clustered in strategic locations to maximize conven- ience to the travelling public and maximize sales. Strong customer service is a key ingredient of the PDX commercial strategy. PDX conducts sur- veys at regular intervals to gauge the needs of customers and evaluate performance. As an example, the Port of Portlandâs Summer 2008 Publication Portside states that âthe average PDX visitor flies four times a year, spends 100 minutes in the terminal, has a strong preference for local products, val- ues a quick purchase, and cares about pricingâ (Port of Portland 2008, p. 2). This type of informa- tion is used by PDX in determining how to structure its concession program and in tenant selection. All airport shops and restaurants must comply with the airportâs âstreet retail pricing policyâ whereby prices charged to the customers must be no greater than prices for similar products at des- ignated off-airport locations. This provides value and pricing consistency to concession customers at PDX. Wi-Fi access throughout most of the airport is free. PDX operates its concessions under a âdirect leasingâ strategy whereby the airport contracts directly with a variety of concessionaires. PDX made the commitment to invest the extra staff time and energy associated with the direct leasing approach with the expectation that it would provide the airport with a greater degree of control over the concession program and produce optimum results. This approach has worked well as evidenced by the high sales numbers and consistent acco- lades from customers and the industry. The success of PDXâs commercial strategy is exemplified in its ranking by CondÃ© Nast Traveler magazine as the Best Domestic Airport in four of the last five years (Baskas 2010). 14.4.8 Unique Concessions and Innovations PDX is one of the few U.S. airports that has successfully implemented strong pre-security con- cessions program. Oregon Market, located after the ticket counters, hosts a strong set of conces- sion concepts and is accessible to travelers, employees, meeters and greeters, well-wishers, and others visiting the airport. Spring Fling, Summer Splash, and Holiday Take Flight promotional events occur during the busiest travel periods annually. These events include sidewalk sales, product samplings, and other special events. Colorful signs and displays are used in the terminal to promote the events. Draw- ings for airline tickets are a featured part of these marketing events. PDX is an airport leader in sustainability. PDX has solar panels on the terminal roof providing power to the Nike store; free compostable âshop, dine, and flyâ shopping bags; and an extensive program to turn food waste into compost for beneficial use. PDXâs commitment to the environ- ment is exemplified by its receipt of ACI-NAâs 2010 Outreach, Education, and Community Involvement Award for its Airport Futures Project under which the Port of Portland, the City of Portland, and the Portland-Vancouver communities worked together to create a long-term airport master plan and city-use plan for PDX that incorporates community values and integrates sustain- ability principles. 14.5 Amsterdam Schiphol International Airport Amsterdam Schiphol Airport (AMS) is the fourth busiest airport in Europe and one of two hubs for KLM/Air France. AMS has been aggressive in developing its concessions for decades, 236 Resource Manual for Airport In-Terminal Concessions
long before the commercialization trend began in the late 1980s, using a single terminal, pier/ finger concept to encourage transfer passengers and to create a major tax and duty free shopping opportunity. 14.5.1 Ownership/Governance Amsterdam Schiphol Airport (AMS) is owned and operated as a subsidiary of the Schiphol Group, which also operates other commercial airports in the Netherlands including Rotterdam the Hague Airport, Lelystad Airport, and Eindhoven Airport. AMS is run as an independent commer- cial company. Plans to privatize the airport were abandoned in 2007. Schiphol Group is owned by the Kingdom of the Netherlands (70%), the Municipality of Ams- terdam (20%), AÃ©roports de Paris (8%), and the Municipality of Rotterdam (2%). Schiphol Group has a corresponding 8% interest in AÃ©roports de Paris, with which it established a strategic alliance after the merger of Air France and KLM airlines. Schiphol Group is overseen by a Supervisory Board and managed by a senior management team that includes a Chief Executive Officer, a Chief Operating Officer, a Chief Financial Officer, and a Chief Commercial Officer, who oversees the consumer (retail) and real estate business areas. Schiphol Group also has ownership stakes in Terminal 4 at New Yorkâs John F. Kennedy Air- port (40%) and Brisbane (Australia) Airport (18.7%) and interests in various cargo, logistics, and real estate and development companies. 14.5.2 Traffic Overview AMS handled 43.5 million passengers in 2009. It is the fifth busiest airport in Europe and served 284 destinations in 93 countries and 92 scheduled airlines. The top European and intercontinental destinations are shown in Table 14-13. 14.5.3 Passenger and Market Characteristics Passengersâ reasons for travel are a mix of leisure and business travel, as shown in Figure 14-11. The nationalities of its passengers reflects AMSâs role as a connecting airport that draws from the surrounding region, as shown in Figure 14-12. Only 33% of passengers are from The Netherlands. The average departing passenger spends more than 2 hours (140 minutes) at the airport, includ- ing 27 minutes in the landside area, 57 minutes in the departures area, and 56 minutes at the depar- ture gate. Passengers are 61% male and 39% female. Case Studies 237 Table 14-13. Top 10 destinations (Amsterdam Schiphol Airport). Europe Intercontinental 1 London Detroit 2 Barcelona New York 3 Paris Minneapolis 4 Madrid Hong Kong 5 Copenhagen Bangkok 6 Rome Curacao 7 Munich Nairobi 8 Zurich Singapore 9 Frankfurt Toronto 10 Milan Kuala Lumpur
14.5.4 Estimated Sales and Revenue As is the practice of most corporatized or privatized airports in the European Union, the air- port does not disclose concession sales and revenue data. However, the duty and tax free See/Buy/Fly shops in the post-security area had estimated sales of $475 million and average sales per departing international passenger of $21.79, according to the 2010/2011 Duty Free and Travel Retail Database and Directory (Duty Free News International 2011). The airport earned net revenue of $79 million on these sales or $7.35 per departing international passenger. Until 2007, KLM operated the duty free shops, except for the perfume and cosmetics category. In 2007, the airport took over operation of the majority of duty free shops from KLM, which increased net revenue by $93 million, according to the airport. 14.5.5 Concessions The pre-security Schiphol Plaza area has a total of 42 shops and 24 food and beverage outlets. In the post-security area, there are 79 shops and 52 food and beverage outlets. Duty free shops are Schiphol Airport Retail and KappÃ© (perfumes & cosmetics). Food and Beverage concessionaires are HMS Host (61 units) including Bubbles Seafood & Wine Bar, Burger King, CafÃ© Amsterdam, CafÃ© Chocolat, CafÃ© Ellipse, CafÃ© Rembrandt, Constellation Bar, Food Village, GrabandFly, Grand CafÃ© Het Paleis, Haagen Dazs, Juggle Juice Bar, Multivlaai, Per Tutti, Murphyâs Irish Pub, Nautilus CafÃ©, Network Bar, Restaurant in de Bonte Koe, Shirasagi, Starbucks, Sushi Bar, Sports CafÃ©, and Vlaamse Frites. Retail concessionaires include AKO, America Today, Aviflora, BLOEM, Capi, Crocs, Expo, Fleurtiek, Global Brands, Gassan Plaza, H&M, Hema, Leonidas, Lindessa, Mexx, Nike, Salotto, Sissy Boy Homeland!, Suitsupply, The Body Shop, and Wonder Woman. 14.5.6 Terminal Configuration The terminal was developed to support the KLM route network and facilitate transfer traffic. Met- ropolitan Amsterdam has a population of only about 2.2 million, and The Netherlands has a pop- 238 Resource Manual for Airport In-Terminal Concessions Figure 14-12. Nationality of passengers (Amsterdam Schiphol Airport). Intercontinental 24% Netherlands 33% Non-E.U. Europe 37% Other European Union 6% Source: These data have been published by Amsterdam Airport Schiphol in Traffic Review 2009 (Amsterdam Airport Schipol 2010). Figure 14-11. Reason for travel (Amsterdam Schiphol Airport). Business 33% Leisure 42% Visitng friends and relatives 20% Conventions and conferences 4% Other 1% Source: These data have been published by Amsterdam Airport Schiphol in Traffic Review 2009 (Amsterdam Airport Schipol 2010).
ulation of only 16.5 million. Therefore, there is not a connecting network of domestic routes. The airport adheres to a single terminal development philosophy, with all concourses connected to a main terminal building housing the concession areas. The terminal layout is shown in Figure 14-13. The airport has over 300,000 square feet of concession space, as shown in Table 14-14. AMS has an extensive landside retail development called Schiphol Plaza, which serves the large number of on-airport employees who commute to work, rail passengers, meeters and greeters, farewellers, and others. There are several office commercial office buildings in the terminal area that contribute to the demand. 14.5.7 Commercial Strategy AMS has long been a leader in airport concessions. It was the first airport in mainland Europe to have duty free shops (Shannon, Ireland, was first in Europe). The airport competes with nearby regional airports for traffic within Europe and competes with major European hubs for long-haul international traffic. To encourage transfer traffic, the termi- nal was designed to allow easy transfers, and the airport was aggressive in developing concessions that featured attractive pricing. The terminal design features utilitarian concourses connected to a terminal with a large post-security circulation area that includes an extensive array of shops and restaurants. The departure gates have secondary baggage drops that allow passengers to check oversize purchases. The rail station at the airport has regular service throughout Holland and high-speed rail service to Rotterdam, Antwerp, Brussels, Paris, Berlin, Hannover, and other cities in the region, which extends the airportâs air service area. AMS has a sizeable landside program, Schiphol Plaza, target- ing the large numbers of terminal employees, returning O&D passengers, visitors, rail passengers, Case Studies 239 Figure 14-13. Terminal configuration (Amsterdam Schiphol Airport). Concourse B Concourse C Concourse D Concourse E Concourse F Concourse G Source: LeighFisher. Table 14-14. Concession space. Concession Space (sq ft) Percent Space per 1,000 Enplanements Pre-security 194,218 62% 8.9 Post-security 118,360 38% 5.4 312,578 100% 14.3 Source: Schiphol Group 2010.
and employees working in the terminal and adjacent landside commercial office buildings. The airport is exempt from restrictions on local shop hours. The post-security duty and tax free shops are branded See/Buy/Fly with a distinctive blue logo on a bright yellow background. AMS has resisted the trend of branding airside shops. Like a depart- ment store, the airport shops are mostly generic shops selling a category such as âelectronicsâ or âfashion.â However, the airport is expected to add some branded shops in the future. Many of the shops in Schiphol Plaza are branded, including H&M, Esprit, Nike, The Body Shop, and Mexx. Food and beverage shops are distributed around the terminal, but most of the larger units are located on a mezzanine level. This preserves valuable departures-level space for more lucrative duty free and retail concessions. 14.5.8 Unique Concessions and Innovations Some recent concession innovations at AMS include the following: â¢ A high-end cognac shop, LâEssence de Courvoisier, offering premium cognac. The shop also has a diamond promotion with a local jeweler. â¢ The opening in two locations in the departures area of Xpress Spa, the U.S. concessionaire. â¢ 2008 opening of Vizzit and since then opening of several Vizzit shops in the departures area. Vizzit is a shop featuring the airportâs best selling products, including liquor, perfume, cos- metics, souvenirs, snacks, and promotions. â¢ Opening of Jill & James, a landside shop combining a range of services including post office, drugstore, dry cleaners, shoe repair, clothing alterations, ATM, and employment agency. â¢ Privium, a membership service offered to frequent flyers that provides expedited security screening, use of business class check-in counters, iris screening and expedited international arrivals inspection, use of a dedicated lounge, and shopping discounts at duty free and other retail shops, with special discounts and promotions for members. â¢ The Holland Casino, located post-security, and open to passengers over 18 with a boarding pass. Lockers are provided for hand baggage. One innovation is Schiphol Groupâs development of a proprietary quality-of-service monitor- ing system called Airport I.Q. Monitor, a tool for measuring customer satisfaction. The airport con- ducts in-person interviews of departing and arriving passengers several times each year during peak, low, and shoulder seasons. The sample size takes into account all of the major airport user groups. Airport I.Q. Monitor is used to monitor a full range of airport-provided and contract ser- vices, including concessions, and this monitoring can in some cases result in incentive payments to or penalties for concessionaires. Another innovation is the inclusion in the terminal of an art museum affiliated with the Ams- terdam Rijksmuseum, which features rotating exhibits of Dutch mastersâ paintings. 14.6 Seoul Incheon International Airport Incheon International Airport (ICN) is the primary international airport serving Seoul and is the principal international gateway to Korea. The airport has been named âworldâs best airportâ in the ACI-World Airport Service Quality survey for the past 5 years (Incheon International Airport Corporation 2010, p. 13). ICN is positioning itself to become a connecting hub for North Asia and is developing an exten- sive route network into China. ICN is highly commercialized and one of the top three airports in the world in terms of concession sales and revenue, taking full advantage of originating Korean passengers and their strong appetite for duty free products. 240 Resource Manual for Airport In-Terminal Concessions
14.6.1 Ownership/Governance ICN is owned and operated by Incheon International Airport Corporation (IIAC), which is wholly owned by the government. The government has plans to sell up to a 49% share to a strate- gic investor that can help it accomplish its ambitious plan to grow connecting air service. Passen- ger destinations by world region are shown in Figure 14-14. 14.6.2 Traffic Overview ICN handles 72% of Koreaâs total inbound and outbound passengers. The airport opened in 2001 as the primary international airport serving Seoul. International airline operations were trans- ferred from Kimpo Airport (SEL) to ICN upon opening, and SEL became a domestic airport. SEL today has a small number of short-haul international flights, mainly to Japan, while ICN handles a small number of domestic flights that account for less than 2% of total passengers. In 2010, the airport was expected to handle an estimated 30 million annual passengers. ICN hosts 70 airlines serving 170 destinations in 60 countries. The airport serves more than 38 cities in China and 26 cities in Japan. According to reports, ICN serves more cities in Japan than Narita airport and more cities in China than Hong Kong airport. 14.6.3 Passenger and Market Characteristics A research study shows that 82% of South Korean passengers make a purchase in one or more duty free shops. ICN competes with several large department stores in Seoul that can sell merchan- dise duty and tax free for pickup at the airport without charge. The airport has about a 50% mar- ket share of total duty free sales. 14.6.4 Estimated Sales and Revenue Estimated sales and revenue are estimated to be $945 million in duty free, $80 million in retail, and $70 million in food and beverage. Estimated sales per enplaned passenger are $68 in duty free, $5 to $6 in food and beverage, and $5 to $6 in other retail. Case Studies 241 Figure 14-14. Destinations by world region 2009 (Seoul Incheon International Airport). Europe 23% Middle East 4% China 22% Japan 15% Other Asia 16% Africa 1% Australia/Oceania 3% North America 16% Source: Incheon International Airport Corporation 2010.
14.6.5 Concessions There are 70 food and beverage outlets, including Benniganâs, Burger King, KFC, Subway, Bohemian Kitchen, Dunkin Donuts, Doughnut Plan NYC, Hoa Binh, McDonaldâs, Hotdog On, Shanghaideli, and Kraze Burgerâs. These outlets include a number of Korean restaurants as well: Bon Bibimbap, Jeontong Tukpegi, Biwon, Gayageum, Jayeon, and Mr. Kim among others. Specialty coffee includes Starbucks, Coffee Bean & Tea Leaf, Caribou, and Nescafe among others. There are three duty free concessionairesâSchilla Duty Free, Lotte Duty Free, and the Korean National Tourism Organization. The three concessionaires operate category shops featuring the major categories (tobacco, liquor, perfumes and cosmetics, and electronics) as well as fashion bou- tiques including Bally, Cartier, MaxMara, Coach, Gucci, Celine, Bvlgari, Hermes, Fendi, Dior, Armani, Salvatore Ferragamo, Prada, Furla, MCM, and Chanel. The specialty retail program is primarily in the landside area and includes The Face Shop, VOV, Missha, Skin Food, Etude House, Aritaum, The Olive Young, and GS Books. Services include baby care lounges for children under 3 years of age and their guardians with nursing rooms, diaper-changing stations, reclining chairs, washstands, and water filters; an opti- cian; laundry and dry cleaning; a medical center; pharmacies (airside and landside); a hair salon (Sergio Bossi); baggage storage; and mobile phone rental. 14.6.6 Terminal Configuration The passenger terminal building includes 50 frontal gates and two concourses totaling 24 gates, which are used by Asiana and Korean Air. Ticketing areas are clustered by airline alliances, with Korean Air and Asiana occupying spaces near the center of the terminal. In 2008, a remote 28-gate satellite was opened that handles all other international airlines. Passengers reach Concourse B by an underground train, which is accessed at the center of the post-security side of the terminal build- ing. The passenger flows through security to the train station expose passengers to a large cluster of luxury boutiques in the main terminal, plus a large concession program in the remote concourse. The terminal configuration is shown in Figure 14-15. Concessions are located on multiple levels. In the public areas of the terminal building, Level 1B has space for concessions and services geared towards the employee market and visitors using the parking structure. Level 1F is the arrivals level and includes convenience retail and food and bev- erage and services including hotel counters, mobile phone rentals, and ground transportation. Level 3 is the public departures area and features an array of quick-serve food and specialty coffee units and some convenience and specialty retail. All post-security concessions are on Level 3 or Level 4. The Level 4 landside area overlooks the ticketing area and includes an array of formal restaurants and bars and cafes, as well as observation spaces, a bookstore, and some quick-serve units. The post-security area on Level 3 has 66 duty free shops in 172,160 square feet of space. Overall, the airport has more than 300,000 square feet of concession space spread over four lev- els, or about 20 square foot per 1,000 enplaning passengers. This space ratio is more than twice that of the average U.S. large hub airport terminal. 14.6.7 Commercial Strategy Experience at SEL airport and the historically high duty free sales at major department stores demonstrated that there could be considerable demand for duty free and other concessions in the new airport. Existing demand combined with rapid growth of gross domestic product and dis- 242 Resource Manual for Airport In-Terminal Concessions
posable income resulted in forecasts of high concession sales. Therefore, concession planning was an integral part of the planning of the new airportâs terminal. ICN has kept up with rapid passenger growth by developing capacity in advance of when it is needed and paying meticulous attention to the details of the passenger experience. The airport company has also added concession space where possible to keep up with demand. A future ter- minal expansion is planned that will bump out the terminal to create even larger concession areas in the post-security areas of the terminal. The airport company has also developed the terminal complex to match airlines and passen- gers with concessions. Korean passengers and other international passengers have different buy- ing and brand preferences. The two Korean carriers, Korean Air and Asiana, each use departure gates on one side of the main terminal, while foreign airlines use remote Concourse B. This allows for developing concessions that are geared towards the passenger mix in each area. China is expected to become an increasingly important passenger segment. ICN has 20 routes to cities within China, and spending by Chinese nationals has been steadily increasing as both traf- fic and the middle class in China continues to grow. 14.6.8 Unique Concessions and Innovations When ICN remodeled and expanded its concessions, the airport company made a major effort to create a superior experience for connecting passengers, who are at the heart of IIACâs long-term strategic plan. Amenities for connecting passengers include the following: â¢ Internet lounges located on the mezzanine and post-security that include small cafes, wireless, and sponsored computer terminals. Fax, scanning, and business services are also available. Case Studies 243 Figure 14-15. Terminal layout (Seoul Incheon International Airport). Source: www.airport.kr (As of October 12, 2010).
â¢ An IT experience center sponsored by SK Telecom that provides high-speed access and includes displays of current and future mobile information technology. â¢ Airstar Terrace, an area on the terminal mezzanine with views of the airfield and terminal apron. Designed to serve long-dwell-time connecting passengers, the Airstar Terrace includes a book cafÃ© offering coffee and newsstand items, a free Internet lounge, a juice bar, and a design gallery featuring local artists. â¢ The âSpa on Airâ sauna, which offers hotel-quality facilities and service and the countryâs first âtub-in-tubâ (one bathtub inside another), as well as Thai-style massages. The spa also has meet- ing rooms, sleeping rooms, and a snack bar. â¢ The Cultural Museum of Korea operated by the National Museum of Korea and located in the airside Transfer Lounge. The museum houses Korean relics covering 5,000 years. 14.7 Copenhagen Airport 14.7.1 Ownership Copenhagen Airport (CPH) is principally owned by MAp Airports (54%), formerly Macquarie Airports and now a separately listed company, and the Government of Denmark (39.2%). No other shareholder has more than a 5% stake. 14.7.2 Traffic Overview In 2009, CPH handled 9.7 million enplaned passengers. The airport has a strong catchment area due to its location in Scandinavia. It is the principal airport serving the city of Copenhagen, which is the capital of Denmark, with a population of 1.8 million. CPH is also the dominant airport in Denmark, which has a population of 5.4 million. The top 10 destinations and top 5 airlines for CPH are shown in Table 14-15. CPH is a hub for SAS Airlines, a member of Star Alliance. SAS is partially owned by the Govern- ments of Denmark, Norway, and Sweden. CPH is the busiest airport in the Nordic countries. Con- necting passengers make up 26% of total passenger traffic. Low-cost airlines have a 14.5% market share. To attract this business, the airport has developed a terminal with limited amenities and reduced airline charges. CPH was a strategic investor in and technical advisor to Mexicoâs Southeast Group of airports and sold its stake in 2010. 244 Resource Manual for Airport In-Terminal Concessions Table 14-15. Top 10 destinations and top 5 airlines (Copenhagen Airport). 1 London 1 SAS 2 Oslo 2 Norwegian 3 Stockholm 3 Cimber Sterling 4 Aalborg 4 EasyJet 5 Amsterdam 5 KLM 6 Paris 7 Helsinki 8 Frankfurt 9 Zurich 10 Brussels Top Destinations Top 5 Airlines
14.7.3 Passenger and Market Characteristics Passengers are 73% O&D and 27% transfer. Of the transfer passengers, 41% are from Sweden, 9% are domestic, and 36% are other international passengers. A breakdown of reasons for travel by gender is shown on Table 14-16. More than half of all passengers are destined for European Union countries, followed by non-EU Europe excluding Sweden and Finland (Norway is not an EU member). Figure 14-16 shows passengers by destination. Figure 14-17 summarizes passengers by nationality. 14.7.4 Sales per Enplaning Passenger CPH is privately held and does not disclose sales and revenue data. However, the duty free sales per enplaned passenger are estimated to be around $10.00, with annual sales exceeding $100 million. 14.7.5 Terminal Configuration The airport recently consolidated its two main security checkpoints into a single central check- point and is in the process of adding 50,000 square feet of new concessions space. The new consol- idated checkpoint feeds all passengers into a new, 28,000 square foot, walk-through duty free shop. An additional shopping area that includes restaurants, bars, and specialty retail is located at the exit of the walk-through duty free shop. The terminal layout allows for connections between con- courses, with passengers flowing through the central terminal shopping area, which is lined with shops. The terminal configuration is shown in Figure 14-18. CPH is looking to expand its low-cost airline services and expand passenger volumes. In 2010, CPH opened a terminal, CPH Go, serving low-cost airlines with airline terminal charges that are 35% less than the existing terminal concourses. Case Studies 245 Table 14-16. Reason for travel (Copenhagen Airport). Male Female Total Business 60% 40% 52% Leisure 38% 58% 48% Figure 14-16. Passengers by destination (Copenhagen Airport). Figure 14-17. Passengers by nationality (Copenhagen Airport). Sweden 8% Norway 12%Finland 4% Other EU 54% Europe Non-EU 12% Americas 4% Africa, Asia/Pacific, Middle East 6% Source: Copenhagen Airports A/S 2010. Denmark 36%Sweden 12% Norway 12% Finland 3% EU 26% Europe Non-EU 4% Americas 5% Africa, Asia/Pacific, Middle East 2% Source: Copenhagen Airports A/S 2010.
14.7.6 Commercial Strategy CPH is well positioned in terms of facilities, location, and airline service to act as a hub for much of Scandinavia. The high VAT rates and duties on luxury goods provide a strong opportunity for the airport and its duty free and tax free shops for passengers embarking on international flights. VAT rates in Denmark are 25% (meaning VAT comprises 20% of the cost of most items). Other countries in the region have similar high tax rates. The airport company has developed a shopping street reminiscent of the StrÃ¸get, the cityâs famous pedestrian shopping street. Denmark is known for Scandinavian design, and the airport shops include well-known Danish designers including Georg Jensen and Royal Copenhagen. The airport recently opened a tax free arrivals shop where passengers can buy a range of per- fume, cosmetics, chocolate, beer, and wine at the same price as in the departure shops. The airport and the duty free operator absorb the taxes to make this offer attractive. The arrivals shop is also promoted as reducing passengersâ carbon footprint, as the passenger does not have to take the added weight on his or her trip. 14.7.7 Concessions There are 10 duty and tax free shops, 71 specialty shops, and 17 restaurants and bars, with a total of 106,000 square feet (10.7 square feet per 1,000 enplaned passengers). The airport is developing a new consolidated security checkpoint that will feed a 17,000 square foot, flow-through duty free shop, which will exit into the current terminal concession mall. A total of 50,000 square feet of space is planned or in development. After expansion, the airport will have 15.8 square feet per 1,000 enplaned passengers at current traffic levels. Food and operators are SSP and HMS Host. Concepts include Baresso Coffee, Burger King, CaffÃ© Ritazza, Ciao, Eyecon Restaurant and Bar, Joe & The Juice, Kitchen & Co., Kobenhavn, McDonalds, and Starbucks. The duty free operator is Geber Heinemann. Other retailers include Georg Jensen, Royal Copen- hagen, Aigner, AK Kaufmann, Bvlgari, Burberry, Caviar House, Ecco, Gant, Gucci, Hermes, Hugo Boss, Ilhums Bolighus, Lego, Lisbeth Dahl, Montblanc, Porsche Design, Ralph Lauren, Sand, Tie Rack, Tumi, Versace, and WHSmith. 246 Resource Manual for Airport In-Terminal Concessions Figure 14-18. Terminal layout (Copenhagen Airport). Source: CPH.dk (As of October 12, 2010).
Services include an in-terminal Hilton Hotel, meeting facilities, banks, travel agency, pay passenger lounges, childrenâs play area, and currency exchange. 14.7.8 Unique Concessions and Innovations Some of CPHâs unique concessions and innovations are the following: â¢ Duty free shopping at least 24 hours in advance of flight. Merchandise is then ready for pick up at counters in one of the five duty free shops â¢ A Tax-Free Club offering regular discounts on merchandise â¢ Price guarantee to beat department stores by 20% â¢ A women-only cocktail lounge, planned as a refuge for single women business travelers â¢ An iPhone app showing arrivals, departures, shops and restaurants, and special promotions Case Studies 247