Armed with a master plan which will see an investment of Dh2 million ($544,500) on buildings, roads and car park layouts to upgrade its terminal, Ras Al Khaimah International Airport is taking itself very seriously indeed. The airport looks to boost passenger traffic to two million in the next three years.
The management team at RAK Airport is working towards delivering a master plan that delivers in 2012 increased terminal capacity by 140 per cent, seven new departure gates, with 40 per cent increase in retail space, a food court, a business lounge, increased car parking spaces and new duty free shops.
In the two months that the new team, comprising Airport Director Andrew Gower and Commercial Director Mohammed Qazi, have taken over, the change is measurable.
"There is 125 per cent increase in average transaction value at the duty free. It used to average between Dh25 to Dh28. In four weeks, it’s already at Dh70," says Qazi, describing the changes that have made this possible as ‘quick wins’.
Merchandising, stocking, a facelift making the whole experience more welcoming and staff training were a part of this cosmetic strategy, he says, merging the science of retail to the art of it.
It helps that since April 2012 the airport has been mandated to manage the duty free, instead of RAK Airways which earlier managed the duty free. "When Andrew [Gower] and I joined, His Highness Shaikh Saud Bin Saqr Al Qasimi, Supreme Council Member and Ruler of Ras Al Khaimah, passed a resolution saying that the airport will be managed by the team which manages the airport and the airline will be managed by the team which just manages the airline. We are airport people and we are running the airport," Qazi says.
Running the duty free in-house would increase profitability and margins but only if it is done right. "We understand the commerciality and importance of retail. We are controlling that. We are trying to understand what customers are looking for and trying to match the two," says Qazi.
When he took over, Qazi saw that the duty free was not directly accessible. Removing the barrier between the duty free and the walkway has brought about obvious results. "At most airports, you have to walk through the duty free when you are inside. As a rule of thumb, that increases sales penetration by 30 per cent. Taking the barrier down from duty free increased our penetration by almost 70 per cent in three weeks," says Qazi.
Other changes are also small but significant. For example, Qazi tells us that now the duty free offering at departures is different from the duty free offering at arrivals. That may be pretty standard everywhere but new to RAK Airport.
Taking passenger profile into account, the airport’s plans for duty free are seasonal — sunglasses, suntan lotion, mobile SIM cards, swimming costumes, flip flops for tourists coming to beach resorts, and ihram garments for pilgrims going to Hajj when the season kicks off.
Other immediate changes include details such as paying close attention to the inventory. "There is more focused buying now. For instance, earlier we would buy 10 brands of cigarettes. But when we know Marlboro sells the most, why not buy more Marlboro? There were always enquiries about T-shirts, which we did not have in our offering, so now we have T-shirts.
"We know customers like certain types of milk products more than other milk products, so we stocked the right quantities of the ones they want. The milk market is high turnaround, so much so that in a day we have to restock two or three times," Qazi says.
People management is integral to this strategy. Training the duty free staff in project management so they tailor their selling to the season and the time of the day is already a routine.
"We even move the gondolas and shelves around at different times of the day. We serve different types of foods at different times. We understand our passenger profile really well and we are trying to provide products for the type of passengers coming into the airport at different times," says Qazi.
The last couple of months have already seen a lot of milestones — a new business lounge has been opened; RAK Airways has launched its Premium Class product; duty free offerings have increased and a new café has opened.
Qazi, whose work includes a stint at the British Airport Authority, working at Heathrow, Stansted, Gatwick among others, in the commercial retail arena, has many plans for all commercial spaces at the airport.
The next 12-18 months, he says, will see many changes at the airport since he is focusing on airport revenues from all angles — at the tarmac and landing, duty free, food and beverage, retail, the business lounge and car parks.
He adds, "We are working on our fuel strategy from a commercial and service to the airline point of view."
RAK is also considering adding better maintenance, repair and overhaul (MRO) facilities for aircraft.
The success of the airport would depend on the number of passengers and airlines that use it. RAK International Airport had 328,348 passengers in 2011 and is expecting a growth of 50 per cent.
"We have seen a growth of 58.5 per cent already in the first quarter. We are expecting half a million passengers this year and 25 per cent growth the following year," Qazi says.
Compared to Dubai Airports, which handled 51 million passengers in 2011, it is clear that RAK has a long, happy way to go. But that is not a worry.
"Aviation is growing across the GCC. If you look at the statistics for growth in the GCC for aviation, you will grow by default. It is how you want to handle the growth. At RAK, we know that success depends on understanding the key factors of the industry and knowing one’s resource and capability. We recognise our resources and capability. And we know what good looks like, so we are trying to match the two. It is more about doing the right thing and taking one step at a time and less about who is growing at what rate," Qazi says.As an airport, he says, "it is very difficult to attract the passenger to the airport; instead we try to attract the airline to the airport."
Gower and his team are following an aggressive strategy to attract airlines suited to their market. Highlighting its proximity to emirates such as Ajman, Umm Al Quwain and Fujairah, the airport is wooing airlines with its low costs, relatively quieter skies and ample take-off and landing slots.
The marketing plans for the airport include participation in international events, such as the Routes Conference in China. Gower has said that the airport is in discussion with a number of large scheduled operators from the commercial and cargo sectors.
"The match between us and the low-cost carrier is where the synergy is. We will not be the biggest or the largest in the business. However, we are very price-sensitive and low-cost," Qazi says, adding that this by itself may not be enough to get the right partners.
"Other things we are doing include supply chain management within the airport. An airline, for instance, would be looking at landing, parking, fuel, catering, line maintenance and ground handling. We assist the airline to get the best deal from the whole supply chain, which is not a unique thing but it does not happen that often whether you are here or in the UK. We are trying to promote that as a unique selling point," he says.
Already charter and low-cost airlines coming to RAK Airport bring with them a varied mix of passengers.
Qazi says: "We have charter operations coming in from Germany and Scandinavia. Germans are the highest spenders. They have very different types of requirements in products that they want. Then we have labourers coming from the subcontinent."
The duty free currently has a mix of the usual — different types of cigarettes, confectionery, food items such as dry, powdered milk ever popular with the subcontinent market, and souvenirs, sun glasses, watches and some clothing, along with perfumes and cosmetics.
Qazi says this is set to grow very soon. "In the next three months, there will be an expansion of this space. We have got a number of concessionaires who have shown interest and want to come to the airport. There is a local perfume company which has signed a contract and will be starting in a week or two weeks’ time,"
Plans include the pearl offering from RAK and perhaps major UAE-based retailers. "In the slightly longer term, we are talking to the Landmark Group. They have approached us for the Lifestyle brand. They are developing something which they want at the airport," Qazi says. While there is no decided percentage for local versus international retailers, RAK Airport is exploring options, including allowing one company to manage the whole retail.
"We have had meetings with some of the key retailers in the region. In the next 12 to 18 months, we are redeveloping the terminal buildings. We want to partner with retailers who have a number of brands under their umbrella from food to clothing, cosmetics and watches. If we have one big player, we will give the contract to manage the whole retail, bring in a mix of products, based on the profile of the airport today and in the future," says Qazi.