While the facilities and standards at the airport may vary from place to place, there's one unifying trend globally –how expensive airport food is! From cooked items to packed items, the prices are twice or thrice the regular prices in the market, but why does this happen? Well, there are several key reasons for it, including the fact that air travellers are usually from the higher-earning segment of society and have better buying capacity. However, it's not the only reason behind this exuberant pricing.
Here we try to decode as to why even your regular coffee or just the packed water bottle has a heavy price tag.
Because there's demand!
The first rule of determining the price is how much demand is there for the product. Since airports are high-security zones, many outside food items aren't allowed inside. So, when travellers need to eat or drink something, they have no other option than to go for the high priced food inside the airport premises. The supply to these airport stores is limited due to security reasons and various other factors. This creates a gap between the supply and demand and that takes the product prices higher.
Operating Cost
Running an airport store is an expensive affair. Retailers have to pay higher rent and added costs for their operation. To cover this cost and make their business profitable, store owners have to resort to increment in the prices of the products.
Expensive Human Resource
Airports are located at some distance from the centre to the city. So, to get the workforce to the airport, businesses have to cover part of their daily travel and offer more pay than the usual stores. Additionally, the workforce has to undergo special training programmes to be ready to service the demand efficiently. The airport employees have to go through daily pass background checks and be trained in security measures as well. All this adds up to the operational cost of the business and results in the product price surge.
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Limited inventory
As we mentioned, airports are high-security zone and the process of getting the inventory to the store is a multi-level process. Retailers also have to invest in an off-airport warehouse and delivery channel to get the product to the counter. This complexity takes the cost of the product higher and hence, customers have to pay inflated prices.
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Limited Competition
The airport has limited space. So there's a limit to how many stores it can accommodate and that gives retailers an advantage of less competition. They may charge inflated prices and yet buyers will have to purchase items from them because there's no other option.
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