Airport Deliveries
How we shop and dine at the airport is about to change for the better
December, 2020
The Parrot thanks you!
Revenue, Costs and Margins
Revenue and Margins
Most of the Airport Delivery and Digitisation companies are still operating in the red with negative gross profit margins. These new business models are relatively new and negative profits in the beginning are expected as companies are looking to capture market share. At the end of 2019 some companies were getting close to break-even, but then Covid-19 negatively impacted the travel industry and revenues fell.
There are some secondary revenue opportunities for Airport Delivery and Digitisation companies such as marketing and sampling sponsorship opportunities.
Costs
There are 3 distinct types of companies looking to digitise the airport space:
-
food and beverage, at gate deliveries
-
retail shopping delivery and pickup
-
B2B retail platforms
Costs differ depending on the type of company. Food and beverage at gate delivery companies incur relatively high fixed costs in terms of labour costs (delivery services). Labour costs differ from company to company, but usually they are the highest cost as a percentage of revenue - in the range of 400% - 600%. Retail shopping delivery and pickup companies could have very high fixed costs if the business model involves storing the products at the airport as retail space at the airport is often pricey. B2B retail platforms (e.g. in-cabin retail shopping platforms) intuitively have low fixed and variable costs. Major costs for those kind of companies are software development and business development.
All companies, except B2B retail platforms, have significant customer acquisition costs currently in the range 2x - 3x revenue.
Investments
Investments in airport delivery companies continue to grow as the new business model matures and proves successful. Covid-19 naturally has hindered investment in the industry, pushing some companies to crowdfund.
Figure 1: Investments in Airport Delivery and Digitisation companies
Notes: The Parrot collects information from a variety of sources. The chart is based on public data for tracked companies for the period 2016-2020. Last updated Nov 2020.
The New Business Model
Newcomers aim to challenge the "offline" airport environment and meet underserved customer needs. The new type of service is looking to solve customer pain points like having to plan ahead, arrive early or face a limited choice of option based on what is available at the gate. The new business model provides time-pressed travellers, airline crews and airport staff with the opportunity to pre-order retail products or order food and beverages directly at their gate. Airport delivery providers would usually charge a fee in the range or $3-$5 / €3-€5. The proposition is also highly attractive for retailers and restaurants looking for additional revenue streams.
These new types of services could prove to be very beneficial for airports too. As airports are seeing a decreasing or plateauing trend for non-aeronautical revenues due to the rise of ride-hailing apps (decreasing car parking revenue) & online shopping (decreasing retail spend), digital airport delivery services could prove to be the silver bullet. Covid-19 is also pushing the industry to innovate given the need for social distancing.
The size of the opportunity for airport delivery companies is substantial, taking into consideration all occasions - tens of millions of travellers, airport staff and flight crews. According to a survey conducted worldwide by Statista in 2019, the ability to pre-order items on mobile and pick them without having to wait in line would entice 37% of respondents to spend more money in shops and restaurants at the airport.
Risks
In-house development
Airports are seeing plateauing or decreasing secondary revenues due to online shopping and ride-hailing app services. Airports therefore could decide to enhance their digital services in-house to increase revenue.
Major Duty-free operators
Major Duty-free operators (such as Dufry) have already developed pre-order services in leading airports. Other airports and duty-free operators could decide to do the same reducing gaining market share.
Changes in travel
Currently, Covid-19 is negatively impacting travel and with it retail spend of travellers. Startup companies' survival would depend on the rate and shape of recovery (whether it would be an V-shaped, L-shaped or Tick-shaped recovery), government travel restrictions and appetite for travel. For the moment most companies are in a “wait-and-see” situation.
Industry Overview
With recent technological innovations many aspects of everyday life have changed. The retail and food and beverage environment at the airport hasn't evolved much. The lighting at the shops is brighter, the ads are shinier and more polished, but the overall experience has not changed much since the 1970s. In a digital-first world, travellers are craving convenience, efficiency and personalised seamless experiences on the go. Shopping and dinning at the airport are mostly offline experiences with customers unable to compare prices on their devices and browse the whole inventory while they are on the go (travelling to the airport, waiting for a shuttle, etc.).
Generally, airport revenue comes from two primary streams - aeronautical (fees paid from aircraft operators and passengers for airport facilities and services) and non-aeronautical (retail concessions, car parking, property rent and others). Non-aeronautical revenue comprises mostly of retail & restaurant concessions and parking and is a key contributor to the profitability of airports - usually in the range of 35% to 55% depending on the airport. As non-aeronautical revenue is negatively impacted by development of ride-hailing services (shrinking parking revenues) and the abundance of digital retail shopping (decreasing concession revenues), airports are looking for ways to reverse the trend.
Customers, Suppliers and Partners
Customers: travellers, airline crews and airport staff
Suppliers: airport restaurants, coffee shops, retailers and duty free operators
Partners: some companies have decided to partner so they can cover larger amount of airports - AtYourGate and Grab
Companies
Insight Parrot explores thousands of data points and is on the lookout for trends that shape the forward curve of your industry to help you navigate the ever changing travel landscape and harness the potential of unfolding opportunities.
Reviewed companies in this analysis:
| Airbuy | Airfree | AtYourGate | Bonflite | Fetchy Fox | Grab | iCoupon | Inflyter | MyDutyFree | SkyBuys |
The Parrot collects information from a variety of sources. If you want to tell us about a new company, notice anything missing or any errors, please get in touch.
Airbuy
Description
A B2B engagement platform
Coverage
India (Delhi Duty Free and SpiceJet)
Founded
2017 in Pittsburgh, USA by Jasjit Makol
Number of Employees
5
Funding
Backed by Incubate Fund MIT and CMU
SWOT
Strengths
- Regional knowledge with 2 regional clients/partners
Weaknesses
- Limited coverage
- Although the company is founded in the US it seems that it is struggling to find business in the US
Opportunities
- Grow internationally
Threats
- Competitive threats
- The product can become redundant as some companies could opt-out to develop similar capabilities in-house
- Decrease in travel and in turn profitability due to Covid-19
Airfree
Description
SaaS platform, connecting travellers to duty-free retailers and travel-related service providers worldwide. The platform enables purchases mid-air by utilising aircraft's wifi.
Coverage
N/A
Founded
2016 in Paris, France by Etienne de Verdelhan and Agnès Debains
Number of Employees
12
Funding
In 2019 raised €2,300,000 Series A from Shiseido and Starburst Ventures
In 2017 raised €885,000 in a seed round from Shiseido and Starburst Ventures
Source: https://www.crunchbase.com/
SWOT
Strengths
- Completed several funding cycles
Existing partnership with Thales Group (designer of electrical systems for the aerospace, defence and transportation markets) to produce a built-in "connected aircraft" capabilities
Weaknesses
- No information about major airlines working with this solution
Opportunities
- Grow list of partners and clients
Threats
- The product can become redundant as some companies could opt-out to develop similar capabilities in-house
- Decrease in travel and in turn profitability due to Covid-19
- Competitive threats
AtYourGate
http://atyourgate.com/
Disclaimer: the founder of Insight Parrot has financial interest in AtYourGate
Description
Travellers have the possibility to use the app to have food and beverage as well as retail products delivered to their gate from most shops at covered airports. The USP is that travellers can order across terminal and security lines, enabling a wider breadth of dining options.
At the moment (10.2020) retail choices are quite limited but seems that they are looking to increase this segment.
AtYourGate has an existing partnership with Grab to make processes more efficient
Coverage
10 airports in the USA. primarily in big cities around East and West coast. Launching Chicago Midway International Airport and Philadelphia International Airport in November 2020
Founded
2016 in San Diego, USA by Chris Hartman and PJ Mastracchio
Number of Employees
35
Funding
In 2020 is raising $1,070,000 though crowdfunding platform Wefunder. In November 2020 it has raised ~$500,000
SWOT
Strengths
- Good & straight-forward service with happy customers (the app has 4.9 stars out of 5 in the App Store)
- Partnership with Grab to increase their footprint. Grab has existing partnership with Collinson, offering Grab with access to millions of travellers and Grab's products are being advertised on the Priority Pass app
- In partnership with Piaggio Fast Forward, AtYourGate delivery teams at JFK, Minneapolis-St. Paul, Denver and San Diego airports will soon be joined in their rounds by small Gita robots (source: https://www.businesstelegraph.co.uk/delivery-robots-to-digital-health-apps-5-ways-your-next-airport-visit-could-be-contactless/).
At your gate has the opportunity to reduce costs by using delivery robots.
Weaknesses
- Available only in the US
Opportunities
- International Growth
- Covid-19 could jump-start the contact-free food delivery at airports
Threats
- Covid-19 could decrease the amount of travellers
- Competitive threats
Bonflite
Description
Bonflite is a duty free shopping platform for air travellers. The platform enables travellers to purchase duty free items at any point during their travel itinerary and then collect them
Coverage
N/A. Partnership with Chinese airline Qingdao Airlines
Founded
2017 in Dublin, Ireland by Hongbo Sun and John Yashi LI
Number of Employees
6
Funding
In 2020 the company joined the Techstars accelerator ($120,000)
Source: https://www.crunchbase.com/
SWOT
Strengths
- Partnership with Qingdao Airlines
- Joined the Techstars accelerator
Weaknesses
- Seem that there is only one partnership with an airline
Opportunities
- Opportunity to use the network of the Techstars accelerator to get visibility and get more partners/clients
Threats
- Covid-19 has impacted negatively the financial statements of airlines. Airlines therefore could limit the funding for new ventures
- Competitive threats
Fetchy Fox
Description
FetchyFox has 2 services:
1. Food deliveries at the gate for passengers with reduced mobility
2. Airport-wide solution facilitating touchless pre-ordering, pickup and delivery of goods
Coverage
Ronald Reagan Washington National Airport, Washington’s Dulles Airport,
Edinburgh Airport
Founded
2016 in Sunnyvale, USA by Christina Apatow and Cha Li
Number of Employees
5
Funding
In 2018, $15,000 prize as part of an Airport Innovation Challenge by the Metropolitan Washington Airports Authority
SWOT
Strengths
- Focusing on travellers with reduced mobility
- In 2020 they have introduced a new service - an airport-wide touchless platform that could prove to be appealing to airports if it increases secondary revenue (retail, parking, etc.)
Weaknesses
- Limited coverage
Opportunities
- International Growth
- Covid-19 could jump-start the contact-free food delivery at airports
Threats
- Covid-19 could decrease the amount of travellers
- Competitive threats
Grab
Description
The biggest mobile ordering airport platform
Grab has several partnerships, most notably with American Airlines. The company also has an existing partnership with AtYourGate to make processes more efficient
Coverage
26 in the USA, 1 in Mexico, 10 in the UK, 2 in Sweden
Founded
2014 in Houston, USA by Mark Bergsrud
Number of Employees
15
Funding
Completed 2 investment rounds from Collinson for undisclosed amount
SWOT
Strengths
- Completed 2 investment rounds from Collinson
- Together with Inflyter and Collinson they will form Collinson Airport Alliance - an airport ecosystem that could prove appealing to airports as it could increase airport's secondary revenues (retail, dining, etc.)
- Due to the existing partnership with Collinson, Grab has access to millions of travellers and Grab's products are being advertised on the Priority Pass app
- Strong & executive team
- Good digital footprint
Weaknesses
- Concentrated in the US - lacking international coverage
Opportunities
-
Threats
-
Inflyter
Description
A platform digitising the duty free retail at airports. Travellers can order items through the app and it would be waiting in a secure locker at the airport
Coverage
Bahrain Airport
Founded
2015 in Paris, France by Wassim Saadé and Nicolas ROBERVAL
Number of Employees
5
Funding
Completed investment round from Collinson for undisclosed amount
SWOT
Strengths
- Together with Grab and Collinson they will form Collinson Airport Alliance - an airport ecosystem that could prove appealing to airports as it could increase airport's secondary revenues (retail, dining, etc.)
Weaknesses
- Limited coverage
- The solution needs airport space to install Inflyter lockers. As retail space is expensive the product is associated with high fixed costs meaning that it needs a solid stream of orders
Opportunities
- Opportunity to use Collinson's network to increase coverage
Threats
- Increase in airport space costs
- Reduction in travel due to Covid-19
MyDutyFree
Description
Service for pre-ordering goods in duty free retail shops. MyDutyFree is working together with the duty free retailers and is digitising their offerings. The items are pre-ordered and then picked up from the shop
Coverage
Domodedovo airport, Kazan airport, Irkutsk airport, Koltsovo airport, Kurumoch airport, Zhukovsky airport, Mumbai airport, Boryspil airport, Odesa airport, Kyiv airport, Baku airport
Founded
2015 in Kyiv, Ukraine with by Aleksandr Gusarov, Katerina Furtak
Number of Employees
8
Funding
In 2015 the company raised raised $600,000
Source: https://www.crunchbase.com/
SWOT
Strengths
- Present in a number of airports in Russia, Ukraine and India
Weaknesses
- No investment rounds have been completed since 2015
Opportunities
- Grow internationally
Threats
- Lots of Duty Free providers (e.g. Dufry) have developed similar products internally
SkyBuys
Description
A duty-free platform enabling travellers to shop remotely and have their goods waiting for them for pick-up at the airport's retailer
Coverage
N/A
Founded
2017 in Sydney, Australia by Alec Kemmery
Number of Employees
9
Funding
In 2019 completed a seed for an undisclosed amount
In 2018 completed a A$50,000 pre-seed funding round
In 2017 raised $250K in a pre-seed round from undisclosed investors
Source: https://www.crunchbase.com/
SWOT
Strengths
- Offering a $o cost integration solution for airlines
- Partnership with Heinemann Australia
Weaknesses
- Limited number of partners/clients
Opportunities
- Grow internationally
Threats
- Some Duty Free providers (e.g. Dufry) have developed similar products internally
- Reduction in travel due to Covid-19
iCoupon
Description
iCoupon is a B2B platform for digital vouchering in airports around the world. It provides a way for airlines and airport retailers to issue compensation, incentives and offers to travellers
Coverage
Close to 100 airports across Europe
Founded
2015 in Manchester, UK by Richard Bye
Number of Employees
6
Funding
-
SWOT
Strengths
- Close to 100 airports in Europe
- Lots of partners (airlines, airports, etc)
Weaknesses
- Limited coverage for other markets in APAC and America
Opportunities
- Grow internationally
- Partnership with companies that offer flight delay insurance products
Threats
- Competitive threats
