Why Airports Want So Much Expensive, High Volume Retail (Families Beware!)

Reacting to the news that the moving walkways on United’s C concourse at Chicago O’Hare are being removed after the walkways in DFW’s D terminal were taken out in order to encourage more retail shopping, David B. e-mails,

[Moving walkways are] already gone from Terminal C in Newark, makes traveling with the three kids much worse.

And as much as foodies love the new restaurant selection in Newark, it’s terrible for families, expensive, slow, and not the sorts of food kids want to eat.

It seems worth explaining why airports want to encourage shopping and restaurant sales, and especially high-end sales — and why it would be worth a million dollars to rip out moving walkways.

Airports have a huge incentive to attract high price, high margin businesses and drive up their revenue.

  • Restaurant costs are really high inside a terminal, and airport security makes them even higher (tethered knives, screening of ingredients coming in). Airport conditions are why airport restaurants are usually so bad.

  • Airports as public entities make things more expensive too, there are often monopoly suppliers of certain goods that all restaurants are restricted too. (You may notice only a single kind of bottled water in some airports, and restaurants may be permitted to buy wine from only a single supplier.)

  • Airports are taking a percentage of revenue off the top as part of concessions leases.

Airports want restaurants to have enough of a margin to cover the extra costs of operating inside the airport, in order to afford expensive leases, even at the same time they often impose ‘street pricing’ (most often restrictions that prices at an airport vendor cannot be more than 10% over what is charged for the same goods outside the airport).

And airports want retail outlets to earn as much gross revenue as possible, since they usually take a percentage off the top.

That works for many passengers, airline passengers are often expensing their meals and in any case have higher than average incomes overall. But for families buying meals not just for one or two people but for four or five, it gets expensive.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. Airports like passengers to pay a lot in concessions because it means that they need to charge the airlines less to cover costs. Lower cost per enplanement makes the airport look better, which makes the airlines consider adding more flights.

  2. This is why food courts are great — buy the kids whatever junk they’ll eat, and then for yourself get the good stuff from one of the high-end restaurants (provided they sell stuff to go, like Tortas Frontera at ORD).

  3. The ripoff for bottled water inside most airports ought to be looked at as a denial of human rights, esp. in those airports without copious drinking water fountains.

  4. @SST

    Bring an empty bottle through security. I agree that some airports don’t have copious fountains, but I virtually always manage to find one. If you pay for water at those prices, you’re part of the problem

  5. So ‘in other words’ yet another example of how the industry is out of step with the rest of the American marketplace. Don’t get me wrong, I don’t want junk food galore with greasy paper bags, but if the rest of the world has lots of food options reasonably priced for families and Airports are still trying to run this whole “captive audience” spiel then yet again despite your efforts to continually expound that the aviation industry operates on a basis of ‘supply’ and “DEMAND’ what you actually see is they operate on a ‘captive audience’ model that has nothing whatsoever to do with consumer driven Demand.

    In some ways it’s simple. It’s like new sports stadium leases for restaurants. If you don’t want to pay for the rights, don’t put your business there.

    But this trend where paid services are attempting to subsidize their income this way forcing people to endure more and more bland unwanted marketing is just simply BORING at this point in 2015.

  6. The whole thing reminds me of a Jedi Mind Trick gone bad.

    You don’t “really” want to fly direct form San Francisco to Chattanooga, you’d much rather connect in Tallahassee. ( I don’t really…. )

    You don’t “really” want to get where you’re going and back out to what you need to do or came to see. ( I don’t really…. )

    You don’t really want to eat that fresh fruit , salad and tasty food. Twinkies for 7.99 . ( Yes Twinkies . Please more twinkies and Bad Mac N Cheez)

  7. I would love to see an article explaining why some airports devote vast retail space to ultra high-end merchandise like Cartier watches and Hermès scarves. I assume there is more money to be made selling a few scarves an hour rather than a lot of food or other goods, but it just doesn’t seem to add up somehow.

  8. What percentage of the flying public has children in tow? I would guess fewer than five percent. I would hope airports wouldn’t make decisions on how best to serve the overwhelming majority of passengers in an effort to serve this very thin slice of the air travel market.

  9. Oh the irony…. Here we are on a blog that espouses the virtues of flying up front, the best restaurants, the best hotels, perks of being chauffeured to your plane in a limo, little private over water huts in tropical paradises, and we are discussing whether it gets a bit expensive to feed a family in an airport? Really?

  10. My travel experience gets much better by paying, say $50 for a nice meal at Heathrow compared to “paying” around double the miles for business class. But that’s just me.

  11. I tend to like nicer airport restaurants. My point is to explain the phenomenon, and share my explanation with the person writing to me who was concerned about family meal costs.

  12. I’m MORE than willing to pay a bit more if it discourages the self-entitled jackasses from bringing their little ankle-biting germ factories….

  13. or train kids to eat normal food from the get-go. Mine refuses to eat anything of kid”s menu but will devour steak and certain types of fish.

  14. Airports offer better values than places like Disneyland for dining options. I would much rather see the recent changes in quality that have been having in a number of airport restaurants.

    What I find more annoying is the replacement of useful stores with very high end fashion stores (e.g. LHR T5’s parade of stores like Louis Vuitton and Cartier, at the expense of stores offering more useful and local products). Luckily this doesn’t seem to be the case at most US airports other than LAX.

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