In the first of a new series about travel retail in India, #Miles2Go Consulting Services founder Shriram Sanjeevi explains why most government-run airports in India are failing to engage passengers commercially, and how this can be overcome.
“Design is not how it looks, rather how it works” – Steve Jobs
I have been travelling across India for a decade and a half now, both for work and leisure.
My first flight was for an interview in Mumbai and I took a mid-afternoon flight from Chennai in 2002. It was an Air India flight and the terminal building was hardly crowded. I took a return flight at 2am because that was the cheapest one.
Later in 2004, I joined United Colors of Benetton as Area Manager and started flying more often from Bangalore to the rest of South India, and for monthly meetings to Gurgaon, where our head office was located.
The terminal building at HAL Airport (a defence airport, now not in commercial use) was very easy to access and was a functional one. It was less than 10km from the city centre, less than a mile from the main road, and one could hop in and hop out in a jiffy. Almost.
Being run by Airports Authority of India (AAI), a government entity, the passenger terminal building was no more than a large civil structure with a 20ft high ceiling, a few chairs, and a VIP room. As far as retail goes, there was one stall that would sell refreshments, a book shop and a Cauvery Handicrafts shop (another government undertaking). And all these were before the security check. After security, there was just a counter that would sell coffee, sandwiches and chocolates. This was until 2008. Somewhere in a cosy corner in the first floor was a dilapidated restaurant with a bar!
All airports in India were managed by government-owned AAI until 2006, when a few were privatised. Delhi and Hyderabad airports were awarded to the GMR Group, Mumbai to the GVK Group, and Bangalore to a consortium led by Zürich Airport. Delhi and Mumbai were brownfield airports while Bangalore and Hyderabad were greenfield, so they could start afresh from the ground, quite literally.
I was part of the Bangalore International Airport Limited (BIAL) team that conceptualised the passenger amenities at the new airport at Bangalore when the groundwork began in 2006. We modelled the new airport’s retail areas on the erstwhile HAL Airport and other airports in India – in the sense of how not to design and build commercial areas.
We took every step cautiously so that the commercial areas at the new airport were not akin to the lethargy, bureaucracy and consumer apathy with which AAI airports are built and managed. We came up with designs that were conceived by experts in airport concept creation and the result was a fantastic, awe-inspiring retail and food & beverage zone which was almost an integral part of the terminal building.
Of course, price is what a consumer pays and value is what they derive, although most of them do not understand the difference.
The first reaction among the passengers who flew in the first year from our airport at Bangalore was that they felt like they had ended up in a mall of sorts where planes were taking off or landing. But we also ensured that not an iota of inconvenience was caused to passengers, whether they wished to shop or not. We also ensured the prices of food products matched the value they offered. So the airside outlets charged a tad higher while the landside ones and taxi pick-up areas were much lower. Of course, price is what a consumer pays and value is what they derive, although most of them do not understand the difference.
We also learnt through various surveys before the new airport opened that the ease of ingress and egress was a key consideration in creating passenger satisfaction. The team worked tirelessly to achieve this. I was personally involved in the choice of vehicle (cabs) by the taxi operators, the routes in which the state government-run buses operated, as well as parking and traffic arrangements. We even created a plaza in the parking area so the public at large could drive down to the new airport, perhaps in the late evenings or in the night just to have a cup of coffee and gaze at the stars and the aircraft landings and take-offs.
Most recently, I flew out of Chennai Airport (and I fly for work at least twice a month). Even a decade after airport privatisation began, it is amazing to see nothing much has changed in the way that airport looks or operates. Chennai and Kolkata airports, among the top six in India, are still run by AAI. There has been stiff resistance from local employees to the prospect of privatising these airports. And the result is lack of empathy to passengers.
After my stint at BIAL, I was responsible for expanding the footprint of Café Coffee Day, India’s largest coffee retail chain. It now has over 1,500 outlets across the country and a limited presence in Eastern Europe and Malaysia.
Most of the outlets are located so that no-one can spot them, let alone shop in there
During this time, I represented the chain and participated in over a dozen airport tenders, mostly at airports run by AAI. It was a cumbersome process – the whole thing, from understanding the tender document to negotiating for space.
For example, they would offer just 10sq m for a coffee shop. We would have to convince them to redraw the tender because nothing meaningful can be done in such a small space. In most cases they wouldn’t budge and we would give it a miss. The result: some inexperienced local player would set-up a Nescafé machine which would pour pre-mixed coffee and sell stale cutlets, samosas and cold sandwiches which carry a lot of bad bacteria.
Secondly, most AAI-run airports do not view income from commercial areas seriously and are fixated with a bureaucratic mind-set that the terminal building is just for holding passengers before they fly away. Therefore, most commercial spots are at inconvenient locations for passengers, which eventually affect the interest of airport opportunities by capable operators.
The retail areas are even worse. Or rather, are a joke. Most of the outlets are located so that no-one can spot them, let alone shop in there. These kind of ‘shops’ (not retailers! duh) sell mostly products which no-one ever wanted to purchase. And at exorbitant prices.
The AAI airports were mostly older buildings which were at least two decades old. However, many of them now have swanky terminal buildings which have been built with significant amounts of taxpayers’ money.
After writing all that, let me also say this. Things are changing. But slowly.
Airport commercial managers at AAI have sensed that there is just too much difference between the four private airports in India with the other 25+ AAI-run airports. The comparison is not just in the F&B or retail offering but in the overall management of the airports. A few AAI Airports now have full-time janitors at the washrooms. Some of them even have a hardware device which measures how content users are with the cleanliness of them.
However, a lot more needs to be done. To begin with, AAI needs to work closely with experts and veterans in the retail industry. Not just for improving the commercial revenues, but rather for understanding ‘customer expectations’ and how to address them continuously. Passengers at airports are AAI’s customers. Who knows customers better than the retailers who sell products, services, food & experiences?
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