The Motley Fool

Sydney Airport wants to slow passengers down

But not the way you think.

Rather, Sydney Airport (ASX:SYD) is aiming to expand its retail offerings by opening up new stores and getting commuters to spend more time at the airport, so they spend more.

So-called “dwell time”, is the time passengers spend before catching their flights. And Sydney airport wants to increase that by making time spent in the airport more attractive. Retail is currently the second-largest revenue earner, behind normal airport revenues such as take-off and landing fees.

According to the Australian Financial Review (AFR), Sydney Airport has added retailers Mimco, Country Road and a dutry pay store, Studio T2, which will offer products such as Napoleon cosmetics and Apple and Samsung electronics for domestic passengers. Spanish tapas bar Movida is opening a branch, while Australian brewery Coopers Alehouse also has plans to open.

And it seems that Sydney Airport will need to morph into something akin to one of Westfield Holdings (ASX:WDC) shopping malls to increase passengers “dwell time”. Technological advances mean traditional airport services such as checking in and dropping off your bags will likely be fully automated within a few years. An international self-service bag-drop trial is currently being trialled for Air New Zealand (ASX:AIZ), operating similar to domestic self-service.

The upside of the advances in technology mean more space becomes available for other uses, such as retail stores.

Sydney Airport is also keen to develop more of its spare land, with chief executive Kerrie Maher telling the AFR that, “At only eight kilometres from the city, our land is valuable and in high demand. We aim to continue to provide superior on-airport facilities for passengers, while maximising the productivity of our commercial land.”

The airport may also have its eyes on hosting events and conferences, similar to Germany’s Munich Airport.

Foolish takeaway

Expect airports to become much more than just the place you go to catch a flight. They are likely to become destinations for local communities and businesses, and potentially an attraction for tourists and travellers alike.

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Motley Fool writer/analyst Mike King owns shares in Sydney Airport.

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