Buying Behaviour in Airport Retailing in India

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Analyzing Shopping Trends & Buying Behaviour in Airport Retailing in India| MMS Marketing End Term Project|
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Authored by:
Rohan Nayak

K. J. Institute of Management Studies and Research, Vidyavihar East, Mumbai 400077|

Abstract
India is considered one of the fastest growing aviation markets in the world. With rapid liberalization of the Indian aviation policy, growth in air travel per capita and boom in the business/tourism sectors, the need for internationally benchmarked airports is greater than ever. Indian airport traffic will triple to 450 million by 2020 requiring USD30 billion of investment in airport infrastructure. It will be necessary to develop revenue models that will make such investments viable and aeronautical revenue alone will not be sufficient. Hence non-aeronautical revenue like retail, F&B, parking etc has become an important source of revenue for the airports.

Over the last five years, PPP airports have been successful in driving sharp increases in non-aeronautical revenue and the indications are that there remains further growth potential in both retail and commercial activities. However, in order to maximize non-aeronautical revenue, airports must carefully segment their retail and commercial customer base and develop appropriate strategies for each of them based on extensive research of their complex, differentiated and evolving requirements.

This research paper will focus on the retail and F&B revenue that the airport can generate, by researching on the passenger shopping trends in the domestic travel in the Indian airports and suggest the retail outlets that can be introduced in the domestic terminals in Indian airports. This research will include primary & secondary research that will identify the stores that can be introduced in the domestic terminals of Indian airports. This research paper will also provide a framework which may act as an aid for all the airports in India to identify the Modern Retail and F&B outlets that can be introduced in the airports to increase the retail revenue. This is especially important today as AAI is planning to modernize 35 airports out of which 24 airports will be modernized under the PPP model. The PPP model aims at maximizing commercial revenues of the airports with private players managing facilities such as retail. The framework in this research paper may aid them in selecting the appropriate retail & F&B outlets for their airport.

Introduction
The retail revolution in the country may be going through some policy reforms, but travel retail is one segment that has bucked the trend. In the last half-decade, travel retail business in the country has grown at 25-30% per annum. The commissioning of many new airports and rise in the operation of low-cost airlines are key factors that have contributed to the growth of the travel retail. The world travel retail industry is estimated at around $40 billion. Not only is the turnover expected to double in the next decade but bulk of this growth is likely to come from the Asian region. The growth of travel retail in the country is closely linked to the commissioning of new international airports by the private sector. The efforts to increase non-aeronautical revenues by airports in the private sector to 50% or more of the total revenue have contributed substantially to its growth. However, compared to private sector airports, revenue from non-aeronautical side is 25-30% of the total revenue in airports in the government sector. The liberalization of the Indian aviation sector in the mid-nineties resulted in significant growth due to the entry of private service airlines. There was, and continues to be a strong surge in demand by domestic passengers, primarily due to the burgeoning middle class with its massive purchasing power, attractive low fares offered by the low cost carriers, the growth of domestic tourism in India and increasing outbound travel from...
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