There are two sides of shopping at an airport. On the one hand, the duty-free shop is always something to look forward to. On the other hand, we’ve all dreaded paying way too much even for just a bottle of water. Food and drinks are always a lot more expensive in an airport than anywhere else. You might think this is due to the lack of competition. Since there isn’t much choice, vendors can set whatever price they want and make a huge profit out of it, but there are a lot of additional costs for airport establishments have to cover, which ultimately get passed down to consumers.
1. Rent
Besides rent being more than double compared to spaces outside airports, vendors have to submit comprehensive Requests for Proposals (RFPs), which the airport authority analyses. A dedicated committee then selects the tenant depending on the existing offer at the airport and what may or may not be missing or needed.
2. Commission
Besides the high rent, airport businesses also need to pay a commission of their profits to the airport authority. These are meant to be used for operating costs, infrastructure mentainance and general airport improvements. The commissions can easily surpass 10%. For example, according to Simple Flying, at Portland International Airport the minimum annual commission is taken from the greater of the two: $80 per square foot each year or 10-18% on sales.
3. Delivery
Delivering supplies to an airport is more expensive than, say, to a local restaurant. Not only airports are generally further away from the suppliers’ warehouses, but strict schedules have to be respected. Moreover, access to the airport parking needs to be granted, which again is not cheap, and the goods also need to pass through security checks.
4. Storage
There is not a lot of room in an airport for establishments to store their stock, so vendors need to either rent additional space, which we already know is expensive, or find nearby storage facilities. This too comes at a cost. Although rent might be lower outside the airport, there are the added expenses for transporting the supplies from the storage to the airport and passing them through security, as well as for dedicated staff for this job.
5. Staff
Working at the airport, be it for security or just selling sandwiches, requires extensive background checks, so employers have to pay for in depth checks for every new person they want to hire. The verification is even more thorough for people working after the security check part of the airport, which is why you might have noticed there is even a price difference between before and after security. Moreover, employers have to cover higher staff costs for transport to the airport, which is not always easily accessible by public transport, and the high parking fees.
