Digital Marketing to Enhance Customer Experience and Increase Airport Revenue (2023)

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2023 A I R P O R T C O O P E R A T I V E R E S E A R C H P R O G R A M ACRP RESEARCH REPORT 251 Research sponsored by the Federal Aviation Administration Subscriber Categories Aviation Digital Marketing to Enhance Customer Experience and Increase Airport Revenue Deborah Meehan Zoe Lindemuth Sonjia Murray The Meehan Aviation Group Plymouth, MA i n a s s o c i a t i o n w i t h Elizabeth Jaedicke Jaedicke Consulting Boston, MA Kenneth Currie Skylark Consulting Group San Francisco, CA

AIRPORT COOPERATIVE RESEARCH PROGRAM Airports are vital national resources. They serve a key role in transpor- tation of people and goods and in regional, national, and international commerce. They are where the nation’s aviation system connects with other modes of transportation and where federal responsibility for man- aging and regulating air traffic operations intersects with the role of state and local governments that own and operate most airports. Research is necessary to solve common operating problems, to adapt appropriate new technologies from other industries, and to introduce innovations into the airport industry. The Airport Cooperative Research Program (ACRP) serves as one of the principal means by which the airport industry can develop innovative near-term solutions to meet demands placed on it. The need for ACRP was identified in TRB Special Report 272: Airport Research Needs: Cooperative Solutions in 2003, based on a study spon- sored by the Federal Aviation Administration (FAA). ACRP carries out applied research on problems that are shared by airport operating agen- cies and not being adequately addressed by existing federal research pro- grams. ACRP is modeled after the successful National Cooperative High- way Research Program (NCHRP) and Transit Cooperative Research Program (TCRP). ACRP undertakes research and other technical activi- ties in various airport subject areas, including design, construction, legal, maintenance, operations, safety, policy, planning, human resources, and administration. ACRP provides a forum where airport operators can cooperatively address common operational problems. ACRP was authorized in December 2003 as part of the Vision 100— Century of Aviation Reauthorization Act. The primary participants in the ACRP are (1) an independent governing board, the ACRP Oversight Committee (AOC), appointed by the Secretary of the U.S. Department of Transportation with representation from airport operating agencies, other stakeholders, and relevant industry organizations such as the Airports Council International-North America (ACI-NA), the American Associa- tion of Airport Executives (AAAE), the National Association of State Aviation Officials (NASAO), Airlines for America (A4A), and the Airport Consultants Council (ACC) as vital links to the airport community; (2) TRB as program manager and secretariat for the governing board; and (3) the FAA as program sponsor. In October 2005, the FAA executed a contract with the National Academy of Sciences formally initiating the program. ACRP benefits from the cooperation and participation of airport professionals, air carriers, shippers, state and local government officials, equipment and service suppliers, other airport users, and research organi- zations. Each of these participants has different interests and responsibili- ties, and each is an integral part of this cooperative research effort. Research problem statements for ACRP are solicited periodically but may be submitted to TRB by anyone at any time. It is the responsibility of the AOC to formulate the research program by identifying the highest priority projects and defining funding levels and expected products. Once selected, each ACRP project is assigned to an expert panel appointed by TRB. Panels include experienced practitioners and research specialists; heavy emphasis is placed on including airport professionals, the intended users of the research products. The panels prepare project statements (requests for proposals), select contractors, and provide technical guidance and counsel throughout the life of the project. The process for developing research problem statements and selecting research agencies has been used by TRB in managing coop- erative research programs since 1962. As in other TRB activities, ACRP project panels serve voluntarily without compensation. Primary emphasis is placed on disseminating ACRP results to the intended users of the research: airport operating agencies, service pro- viders, and academic institutions. ACRP produces a series of research reports for use by airport operators, local agencies, the FAA, and other interested parties; industry associations may arrange for workshops, training aids, field visits, webinars, and other activities to ensure that results are implemented by airport industry practitioners. ACRP RESEARCH REPORT 251 Project 01-39A ISSN 2572-3731 (Print) ISSN 2572-374X (Online) ISBN 978-0-309-69866-5 Library of Congress Control Number 2023937559 © 2023 by the National Academy of Sciences. National Academies of Sciences, Engineering, and Medicine and the graphical logo are trade- marks of the National Academy of Sciences. All rights reserved. COPYRIGHT INFORMATION Authors herein are responsible for the authenticity of their materials and for obtaining written permissions from publishers or persons who own the copyright to any previously published or copyrighted material used herein. Cooperative Research Programs (CRP) grants permission to reproduce material in this publication for classroom and not-for-profit purposes. Permission is given with the understanding that none of the material will be used to imply TRB, AASHTO, APTA, FAA, FHWA, FTA, GHSA, or NHTSA endorsement of a particular product, method, or practice. It is expected that those reproducing the material in this document for educational and not-for-profit uses will give appropriate acknowledgment of the source of any reprinted or reproduced material. For other uses of the material, request permission from CRP. NOTICE The research report was reviewed by the technical panel and accepted for publication according to procedures established and overseen by the Transportation Research Board and approved by the National Academies of Sciences, Engineering, and Medicine. The opinions and conclusions expressed or implied in this report are those of the researchers who performed the research and are not necessarily those of the Transporta- tion Research Board; the National Academies of Sciences, Engineering, and Medicine; or the program sponsors. The Transportation Research Board does not develop, issue, or publish standards or spec- ifications. The Transportation Research Board manages applied research projects which provide the scientific foundation that may be used by Transportation Research Board sponsors, industry associations, or other organizations as the basis for revised practices, procedures, or specifications. The Transportation Research Board; the National Academies of Sciences, Engineering, and Medicine; and the sponsors of the Airport Cooperative Research Program do not endorse products or manufacturers. Trade or manufacturers’ names or logos appear herein solely because they are considered essential to the object of the report. Published research reports of the AIRPORT COOPERATIVE RESEARCH PROGRAM are available from Transportation Research Board Business Office 500 Fifth Street, NW Washington, DC 20001 and can be ordered through the Internet by going to https://www.mytrb.org/MyTRB/Store/default.aspx Printed in the United States of America

e National Academy of Sciences was established in 1863 by an Act of Congress, signed by President Lincoln, as a private, non- governmental institution to advise the nation on issues related to science and technology. Members are elected by their peers for outstanding contributions to research. Dr. Marcia McNutt is president. e National Academy of Engineering was established in 1964 under the charter of the National Academy of Sciences to bring the practices of engineering to advising the nation. Members are elected by their peers for extraordinary contributions to engineering. Dr. John L. Anderson is president. e National Academy of Medicine (formerly the Institute of Medicine) was established in 1970 under the charter of the National Academy of Sciences to advise the nation on medical and health issues. Members are elected by their peers for distinguished contributions to medicine and health. Dr. Victor J. Dzau is president. e three Academies work together as the National Academies of Sciences, Engineering, and Medicine to provide independent, objective analysis and advice to the nation and conduct other activities to solve complex problems and inform public policy decisions. e National Academies also encourage education and research, recognize outstanding contributions to knowledge, and increase public understanding in matters of science, engineering, and medicine. Learn more about the National Academies of Sciences, Engineering, and Medicine at www.nationalacademies.org. e Transportation Research Board is one of seven major programs of the National Academies of Sciences, Engineering, and Medicine. e mission of the Transportation Research Board is to provide leadership in transportation improvements and innovation through trusted, timely, impartial, and evidence-based information exchange, research, and advice regarding all modes of transportation. e Board’s varied activities annually engage about 8,000 engineers, scientists, and other transportation researchers and practitioners from the public and private sectors and academia, all of whom contribute their expertise in the public interest. e program is supported by state transportation departments, federal agencies including the component administrations of the U.S. Department of Transportation, and other organizations and individuals interested in the development of transportation. Learn more about the Transportation Research Board at www.TRB.org.

C O O P E R A T I V E R E S E A R C H P R O G R A M S CRP STAFF FOR ACRP RESEARCH REPORT 251 Christopher J. Hedges, Director, Cooperative Research Programs Waseem Dekelbab, Deputy Director, Cooperative Research Programs Marci A. Greenberger, Manager, Airport Cooperative Research Program Joseph D. Navarrete, Senior Program Officer Stephanie L. Campbell-Chamberlain, Senior Program Assistant Natalie Barnes, Director of Publications Heather DiAngelis, Associate Director of Publications Claire Aelion-Moss, Editor ACRP PROJECT 01-39A PANEL Field of Administration Stephen P. Gordon, Oakland International Airport (retired), Moraga, CA (Chair) Jenna Buckner, Ricondo and Associates, Alexandria, VA Megan Davis, American Airlines Inc., Fort Worth, TX Jeff Kadlec, Montana Department of Transportation, West Yellowstone, MT Carlos E. Ruiz, Cincinnati/Northern Kentucky International Airport, Hebron, KY Mark A. Thorpe, Atmos Global Aviation Consulting, Irvine, CA David Duchow, FAA Liaison Robin Rudish-Laning, Airports Council International–North America Liaison AUTHOR ACKNOWLEDGMENTS The research discussed in this guide was performed under ACRP Project 01-39A, “Creative Marketing Tech- niques to Improve Revenue Generation Partnerships,” by a team of recognized experts in airport economics and airport revenue analysis. The research team would like to thank the many airport operators, technology companies, and airport organizations who contributed their time, insights, opinions, and data.

ACRP Research Report 251 helps airports explore the use of digitalization to make a pas- senger’s journey from curb to gate a more seamless experience and to leverage an inherent business advantage—passenger time spent at the airport—into potential revenue-generating opportunities. The report will be of particular interest to airport-industry practitioners who wish to better understand the fundamental principles of airport digitalization and incorpo- rate them into their customer service and business programs. Airports have relied on traditional revenue streams such as terminal rent, landing fees, parking, and concessions to operate and maintain their facilities. As operating costs continue to rise, many airports face increasing difficulty in meeting funding needs via these traditional revenue sources. New digital tools such as big data, websites, mobile apps, and Wi-Fi can be used in targeted advertising to give passengers contextually relevant information in real time. These practices are already being used by airlines and other companies, and may generate new revenue opportunities for airports. Airports may also be able to enhance existing relation- ships with various stakeholders (e.g., airlines, concessionaires, corporate partners) to increase revenue. However, there has been little research on identifying and applying these new synergistic revenue-generating opportunities at airports. The study included a review of previous research and literature, followed by interviews conducted with airports, industry organizations, and technology developers to uncover cutting-edge innovative technology being deployed or under development at airports. The interviews were also used to identify U.S. and overseas airports and partners advancing the practice in digital marketing and nonaeronautical revenue generation. Six case studies were conducted, whose subjects were four U.S. airports of various sizes, one overseas airport, and one master concessionaire. The report produced under ACRP Project 01-39A includes suggestions for developing a digitalization strategy within the parameters of an airport’s governance structure and FAA policy. It identifies six stages in the passenger journey where the airport could introduce digital technology to help meet passenger needs and enhance revenue streams from parking, food and beverage, and retail/services. It also explains how airports can leverage their inherent busi- ness advantage (i.e., a passenger’s time at the airport) either on their own or by forming part- nerships with others (e.g., airlines, concessionaires, technology vendors) to increase revenue and enhance customer experience. Lastly, the report offers ideas for overcoming several chal- lenges to implementing a customer-facing digitalization program (e.g., resource constraints, lack of awareness, fragmentation, partnership formation reluctance, data limitations). F O R E W O R D By Joseph D. Navarrete Staff Officer Transportation Research Board

1 Summary 5 Chapter 1 Introduction and Background on the U.S. Aviation Industry 6 1.1 Background on the Aviation Industry 7 1.2 U.S. Airport Financials 9 1.3 New Facilities at U.S. Airports 10 Chapter 2 U.S. Airport Governance and FAA Revenue Use Policy 10 2.1 U.S. Airport Governance 11 2.2 FAA Revenue Use Policy 13 Chapter 3 Using the Passenger Journey to Identify Digitalization Opportunities 13 3.1 Stages of the Passenger Journey 14 3.2 Stages of the Passenger Journey that Meet the Objectives of Generating Revenue and Enhancing the Customer Experience 15 3.3 Passenger Needs at the Key Stages 16 3.4 Ways an Airport Can Meet Passenger Needs through Digitalization 19 Chapter 4 Developing a Digitalization Strategy 19 4.1 Introduction 20 4.2 Step 1: Conduct a Data Inventory 24 4.3 Step 2: Implement or Upgrade Digital Tools to Enhance Data Collection 36 4.4 Step 3: Collect Data 38 4.5 Step 4: Define Passenger Segments 39 4.6 Step 5: Conduct Personalized Marketing Campaigns 41 4.7 Step 6: Measure Campaign Performance and Step 7: Refine the Process to Drive More Revenue 45 Chapter 5 Digitalization Strategy by Nonaeronautical Revenue Area 45 5.1 Introduction 45 5.2 Parking 52 5.3 Food and Beverage 62 5.4 Retail 72 Chapter 6 Partnership Candidates that Ease the Development of Digitalization 72 6.1 Airlines 73 6.2 Master Developers or Master Concessionaires 75 6.3 Technology Vendors 75 6.4 Car Rental Companies 76 6.5 TNCs C O N T E N T S

77 Chapter 7 Challenges to a U.S. Airport’s Efforts to Digitalize 79 Chapter 8 Case Studies 79 8.1 Role of the Case Studies in the Guide 83 8.2 Minneapolis-St. Paul International Airport 89 8.3 Metropolitan Washington Airports Authority 97 8.4 Unibail-Rodamco-Westfield 99 8.5 Austin-Bergstrom International Airport 103 8.6 Reno-Tahoe International Airport 107 8.7 Frankfurt Airport A-1 Appendix A References and Background Information B-1 Appendix B Glossary C-1 Appendix C Sample Vendors D-1 Appendix D Stages of an Air Passenger Journey E-1 Appendix E Sample Questionnaire from Case Studies Note: Photographs, figures, and tables in this report may have been converted from color to grayscale for printing. The electronic version of the report (posted on the web at nap.nationalacademies.org) retains the color versions.