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A Choice Model of Airline Passengers' Spending Behaviour in
A Choice Model of Airline Passengers' Spending Behaviour in
To cite this article: Wen-Chun Tseng & Cheng-Lung Wu (2019) A choice model of airline
passengers’ spending behaviour in the airport terminal, Transportation Planning and Technology,
42:4, 380-390, DOI: 10.1080/03081060.2019.1600243
Article views: 14
1. Introduction
Although sources of non-aeronautical revenue may vary among airports, retail revenue is
usually the largest and most important revenue source for major airports and plays a
crucial role in their financial performance. For example, retail revenue accounted for
22% (AU$296 million (US$210 million)) of Sydney International Airport’s total
revenue in 2016 (Sydney Airport 2016). Retail revenue at Brisbane Airport accounted
for 11% (AU$73 million (US$52 million)) of total revenue in 2016 (Brisbane Airport
2016). Retail licences and advertising revenue at Hong Kong International Airport
accounted for 42% (HK$7803 million (US$994 million)) of total revenue in 2016
(Hong Kong International Airport 2016). Airport concessions and rental income of Sin-
gapore Changi Airport, one of the top three airports in the world for concession sales,
achieved 51% (S$1.1 billion (US$0.814 billion)) of total revenue in 2016 (Singapore
Changi Airport 2016). Graham (2009) indicated that in 2006, retail revenue accounted
for about 22% of commercial sources at airports worldwide. Airport outlets are viewed
as being a niche retail market. Omar and Kent (2001) argued that this market is substantial
and indicates growth unavailable in other domestic sectors. However, according to a study
by Crawford and Melewar (2003), around 50% of air travellers do not visit airport shops
during any given journey. This potentially limits the customer base of these retailers. Thus,
to access this lucrative market, airlines have begun to offer online duty-free shopping and
delivery on-board, both before departure and during flights.
In order to improve retail revenue, airport operators and retailers need to understand
passengers’ consumption behaviour inside their terminals. Few studies in the literature
have investigated this issue, and those that exist have focused on passengers’ impulse shop-
ping behaviour (cf. Omar and Kent 2001). Previous studies have found that there is a
relationship between passengers’ dwell time and airport‘s retail behaviour (Borwes
2002; Torres et al. 2005; Appold and Kasarda 2006) and examined the influence of passen-
gers‘ travel-related factors (i.e. trip purpose, travel group, free dwell time) on their airport
shopping behaviour (Crawford and Melewar 2003; Torres et al. 2005; Appold and Kasarda
2006; Bork 2007; Entwistle 2007; Lin and Chen 2013; Lu 2014). Previous studies have also
established the importance of the location of shops on consumer purchasing and indicate
that not only is more retail space becoming available within the terminal zones, but pas-
sengers are consuming more in those areas (Mintel 2000; Hsu and Chao 2005; Entwistle
2007; Graham 2009).
Airport retail activities are broadly classified into three categories: shopping, dining,
and entertainment activities. In the existing literature, few studies have investigated pas-
sengers’ consumption behaviour for different retail activities. There are even fewer
studies that have examined the activity preferences of passengers in the airport terminal.
The main objective of this study was to understand passengers’ consumption behaviour at
terminals by examining the influence of passengers’ travel-related factors, shopping inten-
tions, and socio-economic factors on the spending behaviour of three different consump-
tion activities: (1) shopping, (2) dining, and (3) entertainment (i.e. free internet kiosk,
massage chair, free Wi-Fi service). This study aims to provide insights into passengers’
consumption behaviour to assist in the development of effective marketing and oper-
ational strategies for airport retailing.
three times within the year, 46% indicated flying abroad one to three times per year, 78%
did not use the VIP lounge, 91% preferred to shop after clearing security, and 27% made
unplanned purchases at the terminal. 24% sought shopping information pre-flight, with
an average free dwell time of 67 min. (Here, dwell time is defined as the length of stay
prior to boarding the aircraft and can be divided into ticket processing time, the time
needed to clear security, and free time available for shopping (Wu 2010).) 55% had
shopped at the airport terminal, with an average expenditure of AU$177 and an
average time of 33 min. In addition, 73% of respondents had dined at the airport terminal,
with an average expenditure of AU$21 and an average time of 21 min. Among the respon-
dents, 17% had engaged in entertainment at the terminal, spending an average of AU$9
and 20 min. Table 1 shows the composition of the sample.
where Ui (a) is the extent of engagement in airport spending for passenger i. Tia rep-
resents the set of travel-related factors of individual i who intends to shop at airport term-
inal; Iia represents the set of shopping intention variables of individual i who intends to
shop at airport terminal; Sia is a vector of socio-economic variables for passenger i who
intends to shop at the airport terminal. Eia represents the average amount of money indi-
vidual i spends on consumption activities per minute. α, β, λ, γ and μ are the factors to be
estimated, and 1ia is the error term representing the random part of the model.
Preference data were extracted from the survey and analysed using three different
models (i.e. shopping, dining, and entertainment models). The results of these binary
logit model estimations are summarised in Table 2. Based on the likelihood ratio criterion,
the three models fit the data appropriately. The values of the likelihood ratio index (r2 ) of
passengers’ shopping, dining, and entertainment behaviour were 0.336, 0.298, and 0.231,
respectively. All parameters had the expected signs (i.e. positive for longer free time, and
negative for use of airline VIP lounges). Some factors were significant at the 99%
Table 2. Results of the binary logit model for air passengers’ purchasing behaviour at the airport.
Air passengers’ purchasing behaviour at the airport
Model 1 Model 2 Model 3
Retail shopping Dining Entertainment
Constant 2.469 2.534 0.367
Travel-related factors
Free time 1.178** 1.004** 1.098*
Trip purpose (leisure) 0.705* 0.071** 0.538
Airport familiarity 1.339*** 1.637*** 0.023*
Airline business model (low-cost carrier) −0.319* 0.729* 0.302
Shopping intention
Usage of airline VIP lounge −1.356* −3.084** −2.780*
Preference of airport purchasing area 1.633** −1.834* 2.394*
Unplanned shopping 2.897* −1.563 −1.449
Shopping information seeking 0.389 −0.233* −0.248
Social economic factors
Gender (female) 1.398** 0.938 −1.367*
Age 1.001* 1.639* −1.109
Income 0.968** 1.392** −1.005
Expenditure
Shopping (AU$/min) 2.448*** −1.338** −1.085*
Dining (AU$/min) −2.366** −1.365** 1.174*
Entertainment (AU$/min) −1.201* 1.045* −1.348**
Log-likelihood function −583.254 −369.823 −354.598
Likelihood ratio index, r2 0.336 0.298 0.231
Note: the table includes three BLMs, the dependent variable of each BLM is 1 for purchasing, 0 otherwise. The independent
variables were divided into four groups: travel-related factors, shopping intention, social economic factors, and other
activities.
***Indicates 0.01 level of significance.
**Indicates 0.05 level of significance.
*Indicates 0.1 level of significance.
TRANSPORTATION PLANNING AND TECHNOLOGY 385
confidence level, such as ‘airport familiarity’ for both shopping and dining. The results of
the three different models are discussed in the following sections.
dining at the airport is that it reduces the likelihood of spending time on other activities,
such as shopping. Therefore, relative to shopping activities, passengers of low-cost carriers
may choose dining rather than other activities while waiting for their flights.
contrast to shopping, seeking information about retail outlets (−0.233) was negatively
associated with the extent of engagement in passengers’ dining. It is possible that passen-
gers choose shopping over dining, or that they may not have enough time to engage in
either shopping or dining when they spend more effort seeking information on airport
shops.
entertainment and dining behaviour may be reduced by increasing the value of passengers’
retail expenditure. Thus, competition exists between shopping, dining, and entertainment.
With respect to shopping expenditure, the extent of engagement in airport entertainment
decreased by a lesser extent (−1.085) compared to dining (−1.338). This may be because
dining within the terminal is more costly compared to entertainment activities.
In contrast, similar to airport shopping (−2.366), the relationship between dining
expenditure per minute and the extent of engagement in airport dining was negative
(−1.365). This suggests that the extent of engagement in shopping may be reduced by
increasing dining expenditure. This could be caused by the passengers’ budget limits for
all airport consumption activities. In addition, the more money that passengers spend
on shopping, the less they spend at airport restaurants or bars. This may be because pas-
sengers do not expect to spend too much on dining within the terminal. Passengers’ dining
expenditure also had a greater effect on the extent of engagement in shopping (−2.366)
than on the extent of engagement in dining (−1.365). This may be because the more
that is spent on dining, the less there is available to spend on shopping.
Unlike airport retail shopping and dining, airline passengers’ dining expenditure per
minute was positively correlated with the extent of engagement in airport entertainment
(1.174). This shows that increasing dining expenditure may influence passengers to choose
entertainment activities during their free time. This finding again supports the idea that
most passengers choose to engage in dining and entertainment activities simultaneously
by trading off the time and budget for shopping.
The extent of engagement in airport entertainment increased by dining expenditure
(1.174) was more than the extent of engagement in airport dining increased by airport
entertainment expenditure (1.045). This indicates that time spent on entertainment
does not increase passengers’ extent of engagement in dining as much as the extent of
engagement in entertainment increased by time spent on dining. This demonstrates
that passengers may choose to engage in an entertainment activity while they are
dining, but not vice versa. One explanation may be that if passengers are attracted to enter-
tainment activities, then they may not want to stop to eat; however, passengers may
become bored while eating and seek entertainment options. Unlike airport dining, expen-
diture on entertainment activities had a similar effect on the extent of engagement in both
passengers’ entertainment (−1.348) and shopping activities (−1.201) and had a greater
influence on the extent of engagement in entertainment. This may be because passengers
do not expect to spend too much on entertainment, since free Wi-Fi and internet kiosk
facilities are provided for passengers in most airport terminals around the world.
5. Conclusions
The purpose of this study has been to understand passengers’ airport consumption behav-
iour and the factors influencing this behaviour. Results obtained from data collected by an
internet survey showed that passengers’ travel-related factors, shopping intentions, and
socio-economic factors have different influences on the extent of engagement in airport
shopping, dining, and entertainment.
The results offer several important insights. Passengers had a preference for airport
consumption activities in the order of shopping, entertainment, and dining when they
have sufficient time in the terminal. Free time was the main factor influencing passengers
TRANSPORTATION PLANNING AND TECHNOLOGY 389
to choose entertainment during waiting time at the terminal. Conversely, airport famili-
arity was a key indicator of whether passengers were more likely to choose shopping or
dining while waiting in the terminal. Furthermore, relative to shopping activities, passen-
gers of low-cost carriers may choose dining over other activities while waiting at the
airport terminal.
Use of airline VIP lounges had a negative influence on the extent of engagement in all
passengers’ consumption behaviour – this effect was most pronounced for dining. Passen-
gers’ preferences of airport shopping area after they have cleared security was positively
associated with the extent of engagement in both shopping and entertainment, but nega-
tively associated with the extent of engagement in dining activities. Furthermore, all three
consumption activities had a significant effect on each other. The extent of engagement in
shopping was positively influenced by passengers’ airport shopping expenditure but nega-
tively influenced by passengers’ dining and entertainment expenditure. Passengers’ shop-
ping and dining expenditure negatively influenced the extent of engagement in their
dining behaviour, which was positively influenced by their airport entertainment expen-
diture. In contrast, passengers’ dining expenditure had a positive effect on the extent of
engagement in entertainment, but their airport shopping and entertainment expenditure
had a negative influence on the extent of engagement in entertainment.
The results imply that female passengers should be the main target customers. There-
fore, operators of airport retail outlets should focus more on addressing female travellers’
shopping demands. Both older passengers and higher income passengers preferred to
spend their waiting time engaged in shopping and dining activities. Based on the
findings of this study, both airport operators and retailers should gain a better understand-
ing about their target customers in order to develop effective marketing and operational
strategies to attract more passengers to shop while at the airport terminals.
Disclosure statement
No potential conflict of interest was reported by the authors.
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