BWI Visitors Might Shop Mall-Style in the Airport

BWI Visitors Might Shop Mall-Style in the Airport
Baltimore Sun, MD

February 24, 2004

PITTSBURGH - The staples of suburban mall shopping are
present: GAP, Brooks Brothers and T.G.I Fridays. Then,
there's an actual Staples office supply store.

But something is different here. The aisles between
the 100 or so shops are strangely wide. Most of the
bags people carry have wheels. And the shoppers come
and go by airplane.

It's the Pittsburgh International Airport Airmall -
the nation's first mall-style airport concession and a
highly profitable retailing success that the managers
of Baltimore-Washington International Airport hope to
imitate.

The state Board of Public Works is expected to vote
within a few weeks on whether to award the lucrative
contract to manage BWI's retail concessions to BAA USA
Inc., which built the Pittsburgh mall.

The Maryland agency that runs the airport recommended
the company in place of HMSHost Corp. of Bethesda,
which has run concessions at BWI for 30 years.

The officials hope the change will elevate BWI from
its rank of 37th among U.S. airports in concession
revenue per passenger, according to a study of 2002
sales by Airport Revenue News, a monthly trade
publication.

Pittsburgh, by contrast, boasted the highest sales per
passenger in the past year among American airports at
$10.29, or about $9.30 if services such as foreign
currency exchange and advertising are not included.

Travelers landing in Pittsburgh probably can't help
noticing the storefronts inside the airport. The
windows are filled with GAP's colorful sweaters, Nine
West's spring line of shoes and Clinique's makeup.
Signs remind passengers to stop for a Godiva chocolate
and that Pennsylvania does not tax clothes. Skylights
brighten the common areas.

"I usually take my lunch breaks and shop," said
Rhiannon Whalen, an employee at Bath & Body Works,
with a GAP bag on her shoulder, who arrived early for
work to spend money before she made some. "People tell
me every day what a great airport it is."

"Street" pricing at Pittsburgh's Airmall means that
prices are comparable with those at area shopping
malls - and are not inflated "airport prices."

"I wandered around, and the Italian [sandwich] looked
good," said Byron R. Frank, a local Westinghouse
engineer on his way to Stockholm, Sweden. "I knew what
to expect here because I've been here many times. I
know the other airports I've been to have fewer
choices."

Ping Mei Law, on her way back to Ontario after
visiting a friend in Pittsburgh, said she got to the
airport early and had some time to spend shopping. She
had her sights on a "3 for $10" soap deal at Bath &
Body Works.

"We don't have this shop at home, so I always stop in
here," she said. "There's really nothing here I can't
buy on the outside, but they always say to come two
hours early for international flights. I guess that
benefits the merchants."

BAA estimates it could raise concession revenue at BWI
to $7.36 per passenger in the next few years, up from
about $5.50 in 2003.

The company also estimates that revenue to BWI could
reach an average of $11 million a year, or $131
million during the 12-year contract, up from about
$7.2 million last year - after the completion of more
than $1 billion of infrastructure improvements in
progress at the airport, including expansion of retail
space to 120,000 square feet from 60,000 square feet.

Still, not all lawmakers and government officials are
convinced that the airport is getting the best
possible deal. The narrow focus of the airport's bid
proposal brought only two bids, so a legislative
hearing is scheduled for today about the process prior
to the final vote on the contract.

Travel experts say many U.S. airports need to make
changes to keep pace with passenger demands.

As long-term concession contracts expire, more are
turning to so-called developer models, in which a
company leases out space like a shopping mall
operator. Few airports, however, have chosen to turn
over all airport concessions to just one company as
Pittsburgh has done.

"[BAA] is a European model, and Europeans seem to be
doing a better job, so I can see why BWI would reach
out to them," said William R. Graves, a professor in
the School of Aeronautics at Florida Institute of
Technology. "The public has changed its demands since
Sept. 11 because they are spending more time in
airports. Concessions used to be an afterthought, but
now everyone is looking for a model they can reach out
to."

BAA - the American subsidiary of the British company
that owns and operates seven airports in England and
their concessions - has already begun discussions with
several local and national chains, some present in
Pittsburgh, to move into BWI.

They include national chains such as Borders
booksellers, Johnson & Murphy men's shoes, Cheesecake
Factory, Godiva Chocolatier and Swatch watches.

"Pittsburgh has the first GAP to go in an airport, and
BWI should have something like that," said Mark
Knight, a regional director for BAA.

Local companies being sought by BAA for BWI include
Obrycki's Crab House & Seafood Restaurant, Green
Turtle restaurant and bar, Thrashers french fries,
Jos. A. Bank's men's clothing and Chick & Ruth's
Delly. About 30 percent are expected to be owned by
women or minorities.

BAA, which opened its Pittsburgh mall in 1992, also
runs concessions at Indianapolis International Airport
and at three concourses at Boston Logan International
Airport.

Last Saturday in Pittsburgh, shoppers came in waves as
planes landed at the airport, a hub for US Airways.
The airline's struggles, with passengers down 26
percent in the past year, have cut into traffic at
Pittsburgh. With the number of travelers through
Pittsburgh down about 20 percent to 14.3 million last
year compared with 2002, mall sales are also down
about 15 percent, BAA said.

BWI has recovered more strongly since the terrorist
attacks of 2001. That's largely because of the growth
of Southwest Airlines, now responsible for more than
40 percent of BWI travelers. About 19.7 million
passengers used BWI in 2003, up 3.6 percent from 2002.

But BWI's current shop offerings have left many
travelers feeling as though they didn't have much
choice. Lines often grow long at the Starbucks coffee
shops, one of the few brand names available at BWI.

Still, upgrading amenities at BWI won't be as simple
as adopting the Pittsburgh model. Unlike Pittsburgh,
BWI is not a hub airport where people have built-in
layovers. Also, the terminal setup at BWI does not
allow for one central mall like the one in Pittsburgh.

Instead, BAA will build a smaller mall-like area in
the Southwest terminal that's scheduled to open next
year. Other retail outlets will be spread out behind
several security gates, meaning there will likely need
to be more duplication of restaurants and shops.

HMSHost, the longtime concession operator at BWI,
contends it could generate more revenue than in the
past and improve shopping given the same expansion and
improvements that BAA is using for its calculations.
The company points to awards it has won serving other
airports with its "prime" model, in which it operates
all concessions itself and employs all workers.

BWI said the move was not about what Host could not
do, but what developers like BAA could do.

"This has been a very deliberate process that has
literally been going on for years," said Jonathan
Dean, an airport spokesman.

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