Transportation hubs

A new departure?

Covid-19 has precipitated the end of a cycle and profoundly reshuffled of the foundations of travel. Transportation hubs, would they be airports or train stations, had grown accustomed to ever-expanding demand (like very much of the industry). They’re now in a state of shock, and the short term emergency is both their survival and the survival of their key business partners.

Surviving the crisis will be tough but not suffice: we need to build a more balanced model for sharing profit and risk with the airport"
Raphaël Jeanniot, VP Brands & Business Development Europe, SSP. Read full interview here.

In the longer term, they must learn how to navigate uncertainty, as conflicting developments impact passenger counts & mix in ways that are difficult to predict [LINK: conflicting developments on traffic for both air & rail travel]. Some developments could actually be positive for hubs, notably for train stations.

In addition to uncertainty on traffic, transportation hubs will face increased competition from various players, ranging from e-commerce (which offers a similarly convenient alternative to airport shopping) to carriers or online service providers (like Google or, to a lesser extent, Kayak) that will aim at fulfilling travellers needs and desire from end-to-end, and capturing value accordingly.

Last, they must now comply with new health safety requirements, which will create a new pressure to de-densify flows and limit physical contacts.

Covid-19 confronts transportation hubs with a triple risk of uncertainty, further commodification, and increased operational complexity. At a passenger experience (and passenger spending) level, this will impact retail & services, both in terms of footprint and processes, as well as strategies to engage travellers and incite them to spend on premises (and monetise this audience).

Updating the service strategy to a new, still-evolving context is a daunting task, that legitimately raises questions among infrastructure operators worldwide.

It is complex as it needs to address all three challenges together to build economic and operational resilience in the long term. That will reinforce the role of the hub operator as a Customer Experience “Stage Director” [LINK: Airports need to fully embrace their role as Customer Service Director], and will require to further autonomise their strategic response. This should happen of course in line with their overall development strategy (infrastructure investments notably), which both informs and is informed by this service strategy.

If anything, the Covid crisis invites us to accelerate our guest experience strategy.”
Antoine Nougarède, CEO, SNCF Retail & Connexions.

First of all, updating travellers’ knowledge in light of the new Covid-19 context is foundational to an updated service strategy. Beyond the usual segmentation of travellers into homogeneous usage groups, it is important to reassess their weight in both costs and revenues, and how Covid has impacted them (in terms of new habits or emerging new competition, alternatives). This could challenge some well-established thoughts, notably when taking into account the impact of remote working on business travel [LINK: business travel].

READ: How Covid-19 impact customer motivations

On this basis, hubs need to reassess their value proposition to all 4 major stakeholders in the new context of air travel post-Covid: how do they create value for travellers (directly in a B2C model or indirectly in a B2B2C model through carriers and other players), carriers (B2B), communities (B2G: the city/region they service), and their business partners (B2B: retailers, F&B operators, advertising brands…)?

READ: BUSINESS CASE: From branding to concept design (SNCF Gares & Connexions)

Then, how can they implement this service strategy and demonstrate their ability to create value for all stakeholders? There are as many strategic roadmaps as there are hubs, however we believe there are 6 major avenues that are worth exploring:

  • Expand beyond their walls: engage travellers at time of decision-making rather than when they are physically present in the hub, as this could be too late to trigger the purchase of a good or a service (it could be as simple as booking a parking space). Articulate a compelling service proposition and identify direct or indirect channels to promote it
  • Write a new Covenant with carriers: join forces to maximise value for both passengers and carriers, leveraging carriers’ knowledge of their travellers and the communication channels they already have established with airport’s ability to assemble a ground experience tailored to each carrier’s brand positioning. Similar partnerships may be other business partners, such as online travel agents.
  • Go touchless: leverage travellers’ own smartphones to be used as a remote control for the hub, effectively breaking down processes and processing areas into smaller bits that can be performed before travel and in multiple places to avoid bottleneck effects while offering superior service (would that be for luggage check-in or food ordering). The Touchless approach can apply to more physical interactions, including furniture design
  • Monetise the audience, more than the transaction: it makes sense for airports to charge Travel Essentials or F&B operators based on their revenue, as these operators do not derive much additional value from brand exposure. Their model relies on a high captation rate and a relatively small average purchase. However, the model flips over for “speciality” categories, such as branded fashion stores: in this case, brand exposure (the window) to qualified flows of travellers is highly valuable and may be the primary justification for the store presence (more than the sales it actually makes). In addition, at the advertising end of this spectrum, more opportunities are still left untapped.
The binary retail vs. advertising model was outdated even before Covid”
Albert Asseraf, VP Strategy & New usages, JCDecaux. Read full interview here.
  • Embrace e-commerce: transportation hubs can bring value for e-commerce operators throughout the entire purchase cycle, maximising for instance customer engagement (making the products & services more tangible, adding a human touch) or convenience (starting with delivery and returns).
  • Consolidate data: accurate, fresh data is required to enable these strategic orientations. It must include users’ location data throughout all premises (which requires a consolidated wi-fi network architecture) and sales data in order to understand and influence customer behaviour, while offering carriers partners the ability to create new services for their customers (real-time location may be used to make the decision to wait a delayed passenger or not, for instance).

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