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Airports strategically place luxury brands to target wealthy passengers

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Airports strategically place luxury brands to target wealthy passengers
Research
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Gary Leff Chief Financial Officer | View from the Wing

When flying, passengers are the airline's customers, not the airport's. Airports often do not know individual passengers but view them as products. Their real clients are airlines and local politicians. This perspective influences decisions such as the removal of moving walkways at airports like Dallas-Fort Worth and Chicago O'Hare to encourage shopping rather than convenience.

Both airports and airlines benefit from retail sales revenue, incentivizing them to promote shopping. Terminal renovations are frequently funded by selling income streams to private developers who favor high-end shops for their higher transaction values.

Despite appearances, luxury brands like Louis Vuitton, Chanel, and Cartier have a presence in airports worldwide. Tyler from Kenji Capital tweeted on June 22, 2024: "Are people really buying Gucci, Hermes, and luxury goods at the airport? San Francisco International pic.twitter.com/QlTl0mG8LO."

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Five reasons explain why passengers purchase luxury items such as Hermès, Prada, and Gucci while waiting for flights:

1. Passenger demographics skew wealthy among long-haul business and first-class customers. High-end retailers are commonly found in international terminals serving expensive ticket holders.

2. Shoppers on vacation tend to monitor their spending less closely, making them more likely to buy expensive souvenirs or gifts.

3. Passengers from smaller cities without these stores may shop at major connecting hubs that support long-haul flights.

4. Jet lagged and bored travelers might make impulsive purchases influenced by mimetic desire—wanting what others want because they see others wanting it.

5. Money laundering can be a factor; purchasing expensive goods at airports allows individuals to carry items out of the country and sell them abroad for foreign cash.

The strategic placement and marketing of luxury brands ensure that even discerning travelers find themselves tempted to splurge while waiting for their flights—all benefiting the terminal’s residual claimants.

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