One of my least favorite aspects of being at the airport is the high cost of food and drinks. For example, a bottle of mineral water can cost three times more than it does outside the airport.
It's not just the food; almost everything for sale at the airport comes with a hefty price tag. Since there aren't many alternatives available, I often find myself having no choice but to pay these high prices.
My wife and I always wonder why airport prices are so inflated. Fortunately, I found some answers after speaking with several airport employees. So, what are the reasons?
At airports, all retailers must rent space to operate. The cost of renting a kiosk at the airport is typically much higher than renting similar spaces in malls or shop houses.
Due to these high rental costs, many retailers opt for smaller kiosks to minimize expenses. Nevertheless, they must mark up their goods significantly to cover their operational costs.
Most modern airports are located a considerable distance from city centers, like Tokyo's distance from Narita Airport. This remoteness increases the cost of transporting goods to the airport compared to deliveries made to the city center.
Moreover, because airport kiosks have limited storage space, they need to restock more frequently, which further increases transportation costs.
Some tenants try to manage these challenges by renting warehouses near the airport to store goods. However, this solution still involves additional rental costs.
We may already know that the principles of supply and demand are very much in play. Generally, if supply is high and demand is low, prices will decrease. Conversely, if supply is low and demand is high, prices will increase.
This principle holds true for airport vendors. The number of vendors at airports is usually quite limited, leaving passengers with few options but to purchase from these available vendors.
Additionally, there is minimal competition among these vendors because few of them sell similar products. This lack of competition means that there is little need for them to engage in significant price wars to attract customers.
At some smaller airports, the number of passengers boarding or disembarking is also relatively low. This limited passenger traffic can contribute to higher prices at airport shops.
With fewer passengers, there are fewer customers for the vendors, necessitating higher prices to maintain profitability despite the lower volume of sales.
These are the four reasons why food and other goods at airports often come with a high price tag. It turns out that there are several factors beyond the control of the vendors, forcing them to raise their prices to cover costs.
