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Exploring Flight Characteristics’ Impacts on Airport Commercial Revenues: Evidence from Incheon International Airport

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Document pages: 13 pages

Abstract: This study explores flight characteristics impacts on commercial revenues based on transaction data at Incheon Airport duty-free shops. We employ flight type, transit passenger proportion, flight delay time, and departure gate location as flight characteristics. Two indicators, per-flight expenditure and buyer proportion are introduced to measure the impact. LCC negatively affects both total spending and the buyer percentage. The negative effect is more significant on per-flight expenditure than on the buyer proportion. This study shows that ICN s operation policy, which allocates LCCs to Con A disadvantageous for shopping, damage per-flight spending severely. Besides, FSC flights have a much more significant reduction in buyer proportion than LCCs when allocated to unfavorable gates. It implies that FSC passengers are more prone to impulse shopping behavior than pre-planned ones. As the transit passenger proportion increases, both the total spending and the buyer percentage decrease. Transit passengers are low-yield customers not only for airlines but also for airport operators. Therefore, a policy approach converting transit passengers to stayovers creating more economic value is needed. Flight delay increases the per-flight expenditure and the buyer percentage up to a certain level. Excessive delay beyond a certain level can reduce the purchase amount. The unfavorable gate allocation harms total spending, although the impact on the buyer percentage is unclear. It implies that unfavorable gate allocation significantly reduces existing buyers spending. Simultaneously, it is unclear whether the disadvantageous location hinders new buyers inflow. As online shopping channels are emerging, managing passenger s impulse buying propensity becomes increasingly essential. Thus, airport operators need to introduce a balanced view between operations and revenue management perspectives, not to lose existing buyers impulse buying. Allocating flights with strong purchasing power to favorable gates can be a good example.

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