Airport facilities and standards may differ from place to place but there is one recurring theme worldwide – how expensive airport food is! Whether it is cooked items or packaged items, the prices are twice or three times the regular market prices, but why? The main reason is that air travelers tend to be from the higher-income group in society and have better purchasing power. However, it’s not the only factor behind the exuberant pricing. Let’s unravel the mystery as to why even the cheapest coffee or even a water bottle has such a heavy price tag.
It’s in demand!
How much demand there is for the product is the first factor that determines the price. Because airports are high-security zones, many outside foods cannot be brought in. Therefore, when travellers need to eat or drink something, they have no other choice than to purchase high-priced food inside the airport premises. Various factors, such as security, limit the supply of goods at these airport stores. In turn, this creates a gap between supply and demand, raising the price of the product.
Cost of Operation:
It is expensive to run an airport store. Retailers have to pay higher rent and additional expenses. Consequently, store owners have to increase the prices of their products in order to cover this cost and make their business profitable.
A costly human resource:
Airports are located some distance from the city center. Businesses must therefore cover part of their employees’ daily travel costs and offer higher pay than usual in order to get the workforce to the airport. Furthermore, special training programmes are necessary to ensure the workforce can meet the demand efficiently. Airport employees must undergo daily background checks and be trained in security measures. The cost of all this adds up to the business’s operational costs and results in a spike in the product price.
Inventory is limited:
Airports are high-security zones, so it is a multi-step process to get inventory to the store. In order to get the product to the counter, retailers must also invest in an off-airport warehouse and a delivery channel. This complexity increases the cost of the product, which results in higher prices for customers.
At the airport, space is limited. Therefore, it can only accommodate a limited number of stores, giving retailers an advantage of less competition. Despite charging inflated prices, buyers will still have to purchase items from them as there is no alternative.