Following is a transcript of the video.
Narrator: Ever been stuck in an airport, parched and hungry? You’ve already spent a fortune on tickets and baggage fees, and somehow you end up buying a giant Toblerone and a $5 water.
You’re not alone. Spending in airports hit $40 billion in 2017. On average, travelers will spend anywhere from $11 and $140 per airport visit. But all that spending is not entirely your fault. Airports are purposely laid out to lead passengers through moneymaking areas.
First, there’s the parking lot. In 2018, the average cost of a week of airport parking was $96. London Heathrow and the Abu Dhabi airport in the United Arab Emirates had the most expensive lots, charging $249 and $235, respectively, for seven days.
David Slotnick: Parking is pretty lucrative. Short-term and long-term parking cost absolute fortunes. That’s obviously just pure profit to the airport. It’s empty space, basically.
Narrator: Now you’re ready for check-in and security. Even though traveling is becoming easier worldwide, passengers still arrive early for flights. Two hours and 17 minutes before takeoff, on average. By speeding up check-in and security with digital kiosks, TSA Precheck, Global Entry, and 3D CT baggage scanners, airports can get travelers to spend more time in the profitable zones air side. Now you’ll find yourself in what’s called the recomposure zone.
Slotnick: One of the more interesting tricks I’ve seen is the idea of having a composure kind of place at the end of the security line. So you go through security, you have some time to get yourself together, put your wallet back in your pocket, your cellphone, put your shoes back on, make sure you’re all settled, and then you go shopping. It’s just a way to make people a little keener on spending money.
Narrator: Often, the first thing you see after security is duty-free. You have to walk through it to get to your gate. You even notice that, in some airports, London Heathrow, for example, walking paths in duty-free veer to the left. This leaves more space for retail on the right of the path. According to the consulting firm Intervistas, that leads to profits because the majority of people are right-handed and will spend more time looking to the right. And while duty-free means foreign taxes on goods are removed, this doesn’t necessarily mean they’re cheaper.
Slotnick: Duty-free can be a great savings if you buy something like alcohol or cigarettes, which are usually highly taxed. In terms of other things, toys or electronics or even some foods, those aren’t really taxed as highly, so even though there’s no taxes, there’s a higher overall retail price.
Narrator: And you’re not the only one getting suckered into buying a marked-up giant Toblerone. Globally, duty-free is a huge industry valued at over $67 billion in 2018, according to a report from Coherent Market Insights.
After you’re through duty-free, you find yourself in the main shopping area, surrounded by even more dining and spending options. If you’re in a European airport, this is where you’ll likely be forced to hang out. Airports like London Heathrow and Gatwick don’t announce gates until 25 to 90 minutes before the flight, compelling passengers to stay in the central shopping part of the terminal, and there are strategically placed signs that indicate walking times to gates and gate locations in order to keep you stress-free and satisfied. Not to mention massage chairs, spas, ponds, and atriums. Anything designed to keep you relaxed. Because studies show if passengers are 1% more satisfied, airport sales go up by 1.5%.
With two hours left to kill before your flight, there’s a chance you’ll get hungry. Even the restaurants are designed with big windows, relaxing music, and outlets to keep you satisfied and in the spending mood. But, of course, these restaurants don’t come cheap. At Los Angeles International, there’s an 18% markup on food. And while there are some airports, like Seattle-Tacoma, the require food prices to reflect costs you’d find outside the airport, they fully expect you to end up spending more because you think you’re paying less.
The steep prices are partly because restaurants pay high rents to airports, generally a monthly based rent and up to a 15% cut of gross revenues. For Checkers restaurants, rent in American airports is 50% more expensive than in their traditional brick-and-mortar locations. To offset high rents, airport restaurants have gotten more elaborate.
Slotnick: So, it’s not just, like, a chain restaurant, like an Applebee’s or Buffalo Wild Wings. There’s alternatives like steakhouses and more closer to fine-dining-type places, oyster bars, cocktail bars.
Narrator: In Portland International in Oregon, there’s a distillery making whiskey on-site and offering tastings. In Tokyo’s Narita airport, Sushi Kyotatsu restaurant changes the menu daily based on fresh fish coming in from Tsukiji Market. Places like these can easily charge a few extra bucks for the experience.
Finally, your gate’s announced. On the long walk through the terminal, you pass stores set up with diagonal displays, so you can see all the goods from the concourse. The aisles are wide enough to maneuver bags through, and, similar to why you’ll often spend more in airport restaurants, retail prices are inflated to offset the cut airports take. That means you could pay a 200% markup for a bottle of water in some airports.
You’ve got your overpriced snack and magazine, but if you’re traveling to another country, you’ll need to exchange money. There’s always a currency-exchange booth at the airport, but, generally, it’s best to wait until you’re outside, because those airport booths charge between 10% and 26% higher exchange rates, and that’s not including service fees.
Slotnick: You’re just never going to find a worse exchange rate, except for maybe one of those places in Times Square.
Narrator: And even once you’ve made it to your gate, there are still plenty of shops to grab last-minute necessities.
Slotnick: It’s the idea of having retail mixed with the gates themselves. If you want to wait by your gate early, you’re still right next to the store. You don’t risk missing any announcements.
Narrator: Finally, you board your plane, maybe a little frustrated at the airport for your lavish spending. But consider this: Airports are not laughing their way to the bank on all these markups. Airports are expensive to run. Of Europe’s airports, 47% lost money in 2018. But let’s face it. Some airports make you spend more because they can.
Slotnick: It’s annoying, but, I mean, it’s the reality of it. It’s the captive-audience theory, where people don’t really have a choice. You have plenty of time to kill, you’re bored, you know, what’s a great thing to do? Shop.