Entrepreneurs bet big on airport e-commerce
Here’s the universal problem airport concessionaries face every day: “Most passengers are ‘gate anxious’,” asserts David Henninger, president and CEO of AtYourGate, a new airport food and merchandise company based on the US West Coast. Jerome Greer Chandler investigates the problem.
"They want to be at their gate, see their plane, listen to the announcements,” Henninger explains. What they don’t want is to amble around the airport in search of food. “The food they want is ‘way over there,’” two terminals distance, through yet another security checkpoint.
Case in point is the popular California Pizza Kitchen’s (CPK) San Diego International Airport (a.k.a. Lindbergh Field) set-up. The restaurant is located in Terminal T2 West. If you’re flying out of T2 East, it’s a long walk to sate your carving for CPK. If your flight departs from Terminal 1 you could be flat out of luck. T1 is Southwest Airlines’ territory and, as Henninger says: “You physically can’t get [the pizza pie] if you’re not ticketed in that terminal. They have different security.”
Henninger and a pair of co-founders were all frequent flyers. They intuitively understood how business travellers think. “Wouldn’t it be great if you’re running late or have a phone call to make if someone could bring something to your gate? It would be one less thing to worry about,” he says.
Getting off the ground
And so it was that AtYourGate got off the ground – a mobile app-enabled venture aimed at delivering the food or merchandise you select online no later than ten minutes before boarding begins. The cost? Whatever the product sells for at the airport concessionaire, plus a $6.99 delivery fee.
Passengers, airport employees and crewmembers can order items through the mobile app that they themselves can pick up in person from the airport store or restaurant for no additional fee.
In either instance, the bottom line, contends Henninger, is: “We’re able to bring choice back to the traveller.” Not just choice of far-flung items scattered across large airports, but the choice not to bother with the airline’s buy-on-board selection of meals.
“It’s highly inefficient for an airline to offer food to passengers anymore, except on long-haul flights,” says Henninger. “If you’re flying Southwest, say, coast to coast from San Diego to Fort Lauderdale the flight – even with change plane – it’s a long haul to be eating peanuts and pretzels.”
Local airport authority boost
After talking with several dozen airports for about a year, the partners settled on San Diego (SAN), largely because of the support the airport showed. SAN was in the midst of setting up an innovation lab, aimed at “bringing technology and new thinking into the airport,” says Henninger. “They realised that it was hard for a start-up or outside entity to get [started]. There’s a lot of bureaucracy. It’s hard to get in.”
After doing some research, SAN found that travellers, both business and leisure, wanted mobile e-commerce for gate delivery. AtYourGate projects a soft launch of its SAN service in September and a hard launch in October. Henninger says the company is “in close talks with several airports” about expansion.
Entrepreneur driven projects
On the other end of the country, a company called Airport Sherpa is already up and running at Baltimore/Washington International Thurgood Marshall Airport (BWI), Southwest Airlines’ East Coast linchpin. Airport Sherpa CEO and co-founder Patrick DellaValle says: “We expect to launch another one to two airports in 2017 and 10 to 15 of the largest airports in 2018 – both domestic and overseas.” AtYourGate plans, initially anyway, to keep growth confined to airports in the Western US.
Both groups have much in common: entrepreneur-driven, the option to have food and merchandise delivered to the gate or picked up in person and that all-important airport help.
“We’ve had a lot of support from the airport [BWI],” says DellaValle. One result is increased sales. He asserts in-airport stores and eateries “don’t have…much in the way of proactive marketing tools.” Instead of having to rely solely on foot traffic, they can allow sage Sherpa to do the heavy lifting, expanding their sales footprint beyond the terminal in which they’re situated.
Firm numbers as to sales growth are hard to come by at this juncture. One of the people responsible to seeing to it that sales increase in SAN is Jeff Livney, chief experience officer at Grab, a major airport e-commerce platform. It’s the app that underlies San Diego’s gate goodies delivery system. Livney explains: “Mobile [e-commerce] typically has a 20% higher average [spend] size than cash or credit spend in person.” He expects to see that as well at San Diego International.
Thus the fiscal nexus between entities such as AtYourGate, Airport Sherpa and airport revenue. Airport concessionaries often pay rent as a percentage of their revenue. “Grab’s ability to handle incremental sales from consumers that don’t have the opportunity to stop and shop today” is critical believes Livney. That’s because once captive consumers can “do the double-dip. Food is ‘I need it,’ and retail is ‘I want it.’” Marry the two, the theory goes, and the result is a triple win: good for the traveller, good for the concessionaire and good for the airport.
Challenges to consider
No new technology emerges unblemished from the box. Both AtYourGate and Airport Sherpa have dealt with learning curves. That’s why testing and soft rollouts are so important. Airport Sherpa’s Patrick DellaValle says issues such as “how we were communicating with the stores themselves” arose, “whether they were out of a particular item or [if there were] changes to an order.” Another protocol that needed polishing was: “how we were actually locating the travellers at the gate itself?”
Perhaps the greatest challenge is aggregating the various players at the airport under one digital dome. “At the end of the day for this to be a product that is valuable for consumers, [airports] and other partners you need to have a network,” says Livney. “It’s a pretty fragmented industry.” Five restaurants and an equal number of retailers on one digital menu just won’t cut it.
Still, this past summer something fundamental may have begun to change. No longer does mobile e-commerce end at airport curbside. It stretches all the way to your gate.