A recent issue at a West Coast airport called attention to the pricing of water in a particular store. Though the point being discussed at this airport is much deeper than the pricing of water, as an industry we find ourselves still dealing with the definition and execution of street pricing 20 years after it was originally introduced. Today there appears to be three commonly used approaches, “strict street pricing”, “street pricing plus” (street pricing with the ability to increase pricing slight, 10% to 15%) or no restrictive pricing plan.
In 2013, a survey of 100 airports by the Airports Council International’s North America (ACI) indicated that 44% used strict street pricing, and 43% used street “plus” a certain percentage. Only four airports had no price comparison of any kind.
We all understand that primary cost contributors (CAPEX, COGS, Labor; along with shorter term) have driven a need to find ways to improve financial performance; thus the tendency to push the limits of pricing on key high volume items.
Despite the implementation of street pricing in it’s various forms, consumers still believe airport pricing is too high. They feel they are getting a fair value in comparison to what they pay for product on the commercial street.
My question is how do we, as an industry, address street pricing? Is having 2 or 3 pricing models the most effective? Regardless of the pricing model, should we focus on ensuring the pricing of high volume products that consumer/passengers use to determine fair value?
This isn’t a question that will be resolved anytime soon; however, I would like to hear your thoughts. Please send your thoughts/comments to me at SHolcombe@TravelRetailPartners.com