Vietnam airport operator ACV looks to better exploit non-aviation service potential: exec

Vietnam's airports operator ACV expects to earn $145 million from non-aviation services this year, accounting for around 18.83% of its total revenue, which is modest compared to other countries, said deputy general director Nguyen Duc Hung.

Hung said at a recent forum that the significant growth potential of Vietnam's airport retail and services sector has remained largely untapped.

The Airports Council International (ACI World) presented data at the forum showing non-aviation revenue accounted for 30-40% of total airport revenue in 2023.

Xavier Rossinyol, CEO of Avolta Global Group, noted that despite challenges posed by the Covid-19 pandemic, the non-aviation service industry has rebounded strongly.

Rossinyol said he was not referring to minor growth like 1-2% increases in revenue from a few stores or restaurants. But the aviation trade industry has the potential to double or triple in size, which is necessary to reach its full potential.

He urged industry stakeholders to act decisively to capitalize on the opportunity for substantial growth.

Nguyen Kim Ngan, deputy director of Noi Bai International Airport, noted that while Vietnam has heavily invested in infrastructure, tourism and human resources, its post-pandemic tourism recovery has lagged behind other nations.

Ngan said the heavy reliance of airports in Vietnam on aviation-related revenue can be a factor leading to financial instability.

Diversifying into non-aviation revenue streams, such as retail and other commercial services, will not only provide stable income but also enhance passenger experience.

"When passengers have more options, they feel more comfortable and are more likely to spend. This contributes to the local economy by generating sustainable profits and creating jobs," Ngan said.

At Noi Bai International Airport, the share of revenue from non-aviation services has grown from 18% in 2015 to about 25% since 2018. However, there is ample room for further growth, she added.

Innovative retail models

Rahul Sahni, head of Commercial-Non Aero at Navi Mumbai International Airport, shared some insights on modernizing non-aviation retail models.

When designing the Navi Mumbai terminal, they analyzed customer behavior and needs to strategically place shopping and dining options. They observed that passengers spend more time in security check areas, so they prioritized domestic product booths there. Next came the restaurant area offering local cuisine.

They also catered to younger customers, like Gen Z, by showcasing handmade products and encouraging an appreciation for local goods. Additionally, they strategically placed shopping outlets near boarding gates, ensuring passengers can make last-minute purchases as they wait to board.

Sahni also emphasized the importance of integrating airport apps with features like automatic route suggestions to boarding gates, notifications on sales and new menu items, and real-time baggage tracking to enhance passenger convenience.

Prashant Gaurav Gupta, commercial director at Yamuna International Airport Private Limited, stressed the importance of tailoring services to emerging customer demographics such as Gen Z.

Winning the loyalty of these groups requires offering products and services that resonate with their preferences, Gupta said.

By adopting innovative retail strategies and leveraging technology, Vietnam’s airports can unlock the full potential of their non-aviation revenue streams. This would not only benefit the aviation industry but also contribute to broader economic growth and development.

Echoing Sahni, Gupta stressed the need for a dynamic approach to aviation retail. To meet the evolving tastes of emerging customer groups, it’s crucial to offer tailored products and services. For instance, integrating artificial intelligence and virtual reality into the shopping experience can create an engaging and futuristic environment for customers, Gupta suggested.

He noted that consumer preferences tended to change every three years, requiring frequent updates to shopping, dining, and entertainment options.

Flexibility is key; sometimes even a three-month cycle is needed to adapt to rapid shifts in customer expectations, he added.

Gupta also emphasized the importance of sustainability, stating that environmentally friendly and green initiatives were critical for attracting eco-conscious travelers. Airport planning should align with these values to boost non-aviation revenue streams, he said.

Ngan from Noi Bai airport said Vietnam is working to align itself with global trends in airport development.

“To promote growth, ACV has invested in expanding and upgrading commercial services, including duty-free shops, restaurants, and entertainment options. We’re no longer focusing solely on basic services; we’re now offering a diverse range of amenities like entertainment areas, health and beauty care, and business lounges to meet passenger needs, especially for those with long waiting times.”