From frequent flyer to frequent buyer:

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1 From frequent flyer to frequent buyer: How airports and airlines are adopting a retail mindset to drive ancillary revenue An NCR white paper

2 Chances are, if you ve traveled recently you may have mistaken the airport for a shopping center. Challenged with an increasing dependence on non-aviation and ancillary revenues, many airports and airlines are adopting a retail mindset to drive new sources of income. Results from a survey of consumers in the United States, the United Kingdom, France and Germany conducted by Opinion Research Corporation (ORC) for NCR reveal a significant opportunity to optimize those channels and connect with travelers throughout their journey by implementing self-service technologies beyond check-in. 4 areas that can drive revenue and improve the passenger experience: 1 Cash management 2 Interactive wayfinding 3 Web, mobile and kiosk offer delivery 4 Re-accommodation 2

3 Cash management Airlines continue to look for ways to process passengers more efficiently. Handling and managing cash is one area that can have a significant impact on wait times and operational costs, and many airlines are eliminating the use of cash all together. The total dollars loaded onto prepaid cards may climb to $672 billion by Large retailers are cashing in by selling prepaid debit cards to accommodate this growing market, and airlines and airports have an opportunity to extend that same convenience. Offering a self-service cash-to-card kiosk in the check-in lobby could improve the experience for those passengers who prefer to use cash, while retaining any revenue that the airline would have been leaving on the table. When was the last time you were able to make a pre-flight or onboard purchase with cash? But what is the impact on revenue? Survey results reveal that nearly 60% of German respondents and 53% of U.S. respondents would like to be able to use cash for purchases prior to (such as upgrades, bag fees) and while on board the plane (food, entertainment). In France, 14% of people said cash is their preferred method of payment when shopping at the airport. 1. Mercator Advisory Group predicts in its Seventh Annual Prepaid Market Forecast 3

4 Interactive wayfinding Survey results show that today s global traveler may be predisposed to spending prior to boarding: Airports and airlines can maximize spending potential and mitigate fear of missed flights by implementing interactive wayfinding and digital signage technology. Making it easier for passengers to identify where they need to be and how to get there, as well as pointing out targeted areas of interest throughout the terminal, will help increase retail and concession revenue and improve the overall passenger experience by minimizing the stress associated with navigating a large and complex facility. 38% US,UK,Germany UK 16% Germany US 20% 19% US 35% 23% Germany UK 34% 30% France 38% of travelers in U.S., U.K. and Germany think airports have a great selection of shops. But, many passengers may forego shopping and dining because they cannot easily locate points of interest and fear getting lost or missing their flight. When in an airport, percentage who said it s difficult to find the stores, restaurants, business lounges or Wi-Fi hotspots they d like to visit quickly in the limited time they have? Further, approximately 1 in 5 indicated they had either missed a flight or connection, or nearly missed but made it just in time because they were shopping, dining or using other airport facilities and didn t make it to the gate on time. 4

5 Web, mobile and kiosk offer delivery When asked what kinds of purchases they typically make in an airport, survey respondents in all countries selected books/ newspapers/magazines, food/ drink, and souvenirs/gifts as the top three. Respondents in Europe also rated duty-free purchases among the most frequent. Results further reveal that airports can drive even greater retail activity among this captive audience by employing online, web and kioskbased technologies to target offers and cut wait times. When asked which services would encourage them to shop more in airports, respondents in all countries most frequently cited retail or food discount coupons delivered to their mobile or paper boarding pass. Other self-service technologies that could entice additional spend include selfcheckouts that enabled them to pay for their merchandise quickly; endless aisle technology that facilitates purchase of an extended range of items via touchscreen in the airport; and click and collect services that let them buy merchandise online and collect it at the airport or have it delivered to their destination. Which of the following services would encourage you to shop more in airports? mobile coupon self-checkout UK France 36% 36% 31% 34% 28% 19% 22% 16% click and collect endless aisle technology Germany 48% 21% 22% 23% US 13% 12% 40% 31%

6 Re-accommodation Retailers that make it as simple as possible for customers to return or exchange an item are likely to have more loyal customers. Passengers want that same control over their flying experience, however many feel helpless when they need to exchange a cancelled or delayed flight. Approximately half of all, survey respondents said they have had a flight cancelled or delayed. Among those, nearly 1 in 3 had to wait over an hour to be rebooked. Airlines and airports both stand to gain in passenger loyalty, satisfaction and available time to shop, eat and enjoy other airport amenities by giving travelers greater control over managing flight disruptions. Some carriers are exploring self-service re-accommodation solutions that enable passengers to search and book alternative flights. Percentage who had to wait in line over an hour to rebook UK 33% US France 47% Germany 31% 32% 6

7 How to embrace your inner retailer: Don t trash the cash Eliminate the cost and hassle associated with cash handling while accommodating those passengers who prefer to pay with cash by offering cash-to-card solutions. Pre-paid debit cards, key to any retail strategy, can drive revenue for the airline by expanding payment options, as well as for the airport, which can charge a per-transaction fee. Show me the way Airports are taking the static directory to new heights with interactive wayfinding and digital signage technology. By making it simpler for passengers to find their gate as well as airport amenities, and delivering right-time, right-place incentives through mobile and paper boarding pass ad injection, airports can streamline passenger flow and drive retail activity. Streamline returns Cancellations and delays are a common occurrence in the aviation industry. Be prepared by leveraging your self-service infrastructure to streamline the process of re-accommodation, giving your passengers more control over their journey and more time to shop, dine, spend. Methodology: This online survey of approximately 4,000 adult consumers in France, Germany and the U.K. was conducted in 2012 for NCR by ORC International, a leading global market research firm. 7

8 why NCR? NCR Corporation (NYSE: NCR) is the global leader in consumer transaction technologies, turning everyday interactions with businesses into exceptional experiences. With its software, hardware, and portfolio of services, NCR enables more than 300 million transactions daily across the retail, financial, travel, hospitality, telecom and technology industries. NCR solutions run the everyday transactions that make your life easier. NCR is headquartered in Duluth, Georgia with over 26,000 employees and does business in 180 countries. NCR is a trademark of NCR Corporation in the United States and other countries. Let s stay connected at blogs.ncr.com/travel/ NCR Corporation 3097 Satellite Boulevard. Duluth, Georgia USA NCR continually improves products as new technologies and components become available. NCR, therefore, reserves the right to change specifications without prior notice. All features, functions and operations described herein may not be marketed by NCR in all parts of the world. Consult your NCR representative or NCR office for the latest information. NCR APTRA is a registered trademark of NCR Corporation in the United States and/or other countries. All brand and product names appearing in this document are trademarks, registered trademarks or service marks of their respective holders NCR Corporation

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