Changi’s Fantastic, but Why Do They Do It?
My default activity when waiting for my flight to board is to buy a book or magazine from the airport bookshop. However, I arrived quite early for my flight the other day and had a bit of time to kill. As it was Changi Airport, I decided to explore the full range of activities on offer.
I sat on a very comfy couch and watched ESPN in the TV lounge, enjoyed a free 10-minute session on the foot massager, played a bit of Xbox at the video game terminal and finished it off by exploring the butterfly garden. As I enjoyed all of these free activities, I started to wonder: Why do all of these free services exist?
One would think that an airport’s goal is to increase the number of people who come to the airport and the subsequent revenue generated by these people. However, many of the users of these airport services are people on direct flights either in or out of Singapore. For these people, I would assume that the quality of Changi Airport has no bearing on their decision to travel to/from Changi, as they really have no choice in the matter. So, they get to enjoy these free perks while giving essentially zero net profit to the airport.
Also, I would assume that shopping space in the airport terminals is in high demand. After all, the psychological impact of the words “duty free” often leads to a funneling of cash from wallets to the nearest cash register. So why make a free-of-charge butterfly garden instead of leasing out the space to a Louis Vuitton outlet or an outdoor cafe? Those seem like much better sources of revenue.
So, what could possibly entice the airport to provide facilities that do not seem to make any financial sense?
After giving it some thought, I came up with three possible explanations.
The first explanation is rather straightforward: There might be a direct financial benefit to these “free” services. An airport that is chock full of luxuries and services probably does not factor into whether people travel directly in or out of Singapore. However, there is one group of passengers that considers these things — travelers who transit in Singapore. Travelers that need to fly through Singapore or Kuala Lumpur or Hong Kong en route to somewhere else have the flexibility of choosing which airport to spend their time (and money) in while waiting for their next flight. Assuming that these transit travelers are a big source of income for the airport, it makes sense to want to build up a competitive advantage by offering not only the same old duty free shops, but also unique and interesting facilities like a games terminal for the kids or a relaxing spa.
The second explanation is also money-related: Perhaps having the gardens and game terminals can raise the lease price of the surrounding stores. These places are quite popular and draw a number of visitors to the airport.
They also give parents something to do when their children beg to play with the Xbox or to go see the pretty butterflies.
This additional traffic gives a positive externality, or indirect benefit, to the surrounding shops because the more people pass through the gardens, the more likely one will spend money at the nearby sushi place or juice stall.
The third explanation is psychological. An airport, as the first thing that all travelers see when they arrive in a country, is usually where the “halo effect” happens. The halo effect is basically where individuals associate either positive or negative values onto a subject solely based on their first impression.
Perhaps the reader can relate to this. Have you ever felt a country or city you visiting was unpleasant because of problems you had at the airport or on the taxi ride to your hotel? Alternately, have you ever felt very good about a visit because of how nice and pleasant the airport was?
This might be one of the things that Changi Airport (and presumably the Singapore Tourism Board) is actively trying to do. They want to make as strong a first impression as possible. If the halo effect towards Singapore is positive because of the wonderful airport experience, these travelers are likely to spend more time and money in Singapore and are also more likely to return. All of this adds up to additional revenue for the domestic economy at the low cost of providing green gardens, video games and comfortable TV lounges.
So, which is it? Attracting transit tourists, raising shop rental prices, or creating a positive halo effect? It might actually be some combination of the three. Whatever it is, I’m just thanking my lucky stars that I get a free foot massage out of it.
Soekarno-Hatta International Airport, take note: These guys in Singapore are definitely doing it right.