Terminal leave

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A few weeks ago, on a Friday morning, I was asleep at 40,000 feet somewhere above Alaska, the halfway point on the longest flight in the world. I'd entered suspended animation on the 18-hour flight from Singapore to Newark, N.J., having dropped out of time (I was shedding 12 zones) and space into a luxuriously appointed pocket of pressurized air, never technically setting foot in Singapore. I'd spent the previous three weeks like that, shuttling across America and around the world without seeing any of it. I'd been in a different world, one inhabited by 100 million people each year who do their best to ignore it. I was sleeping off the effects of living in Airworld.

Airworld is a country unto itself, the confederation of airports whose borders extend beyond baggage claim to parking garages, rental-car lots, satellite hotels and cargo hubs. It's a country whose capitals are increasingly less concerned with the cities they ostensibly serve than they are with other airports. Atlanta Hartsfield-Jackson recharges itself with 230,000 new passengers every day, nearly half of whom are just changing planes. Chicago's O'Hare does with the same with 200,000, as does London Heathrow with 185,000.

The physical dimensions of airports, led by the new mega-terminals of Hong Kong and Osaka, have caught up to cities as well. They've added shopping malls, conference centers, 24/7 gyms, chapels, post offices, dentists and doctors, rooftop pools and luxury hotels. Airworld will have a gross domestic product of more than $550 billion in the U.S. alone this year, according to the Airport Council International, larger than the countries of Thailand or Turkey. Airports have their own governments, local customs and borders-each entrance is guarded by a metal detector-and on that far side, the FAA, TSA and FBI all hold sway.

Ultimately, Airworld is a glass-and-steel marketing petri dish, an ecosystem filled with travelers who are by definition upscale consumers and essentially run by a handful of companies who have cornered the market on advertising and franchising within them. For three weeks I became a living, breathing part of Airworld (and to fully experience it-full disclosure-some of my expenses were covered by the companies that populate this space).

Outdoor media giants Clear Channel and JCDecaux have divided Airworld's ad space between them after more than a decade of acquiring their competitors, and now are busy inventing the next generation of media. Specialty retailers with low profiles outside Airworld, such as HMS Host, The Paradies Shops and the Hudson Group play mad scientist with brands, mixing and matching those not endemic to Airworld but eager to become a part of its newsstands, restaurants and amenities.

New record

Airworld is the largest coherent, stand-alone branded environment on Earth, and it's only getting bigger. After Sept. 11, there was the prevailing assumption that airports were through, that people would use any excuse to avoid flying the fortified skies. Annual enplanements, i.e. one passenger boarding one flight, fell 10.3%, off of 2000's all-time high of 697.6 million in the U.S. alone. But traffic has recently been creeping upward again, up 8% from 2003 to 2004.

A new record will be set this year, and annual enplanements will break the 1 billion mark, predicts the Airports Council International, enough growth that airport capacity must be beefed up equivalent to 10 airports the size of Dallas/Fort Worth to meet the need. New terminals have already have opened since Sept. 11 in Detroit, DFW and New York JFK-and ACI's members need to spend $71.5 billion over the next five years building more.

Why, in an age of e-mail and free voice over Internet protocol, are we spending more of our waking lives at the airport? (The average "dwell time" before flight has topped two hours.) "As we become more affluent, we become more global," a branding expert with deep roots in Airworld told me. "And we apparently don't just gather more information about people and places; we go explore them. You move information around, but it causes you to move, too. "

The deregulation of the airline industry in 1978 may have democratized the skies to an extent, but the sudden, massive infusion of tourists only served to stiffen Airworld's class structure. At the bottom are once-a-year travelers (derisively dubbed "Ma & Pa Kettles" by Airworld's elites), followed by, in ascending order, infrequent holiday fliers (like me), run-of-the-mill business fliers, and, at the top, vanishing into a haze of ever finer gradations, the Road Warriors.

Unfortunately, Airworld lacks a census, although Arbitron released a study a year ago that is, for now, the last word on the subject. Subtitled "Exploring an Undiscovered Upscale Medium," it confirmed that even the Ma & Pa Kettles stand out as demographically desirable: More than half of the 92 million travelers the study covered had annual incomes of $50,000 or more, compared to just 37% of the general population. The mere willingness to set foot in Airworld marks one as wealthier, more educated, more inclined to splurge on luxury goods and less inclined to watch TV. And the more time spent up in the air, the more upscale they happen to be.

Frequent fliers-defined here as the 17 million Americans who fly four times a year or more-make up less than a fifth of all air travelers but nearly three-fifths of total enplanements. A third of them make more than $100,000 per year. The men-about 60% of them are male-are twice as likely to buy a new luxury vehicle, or six-and-a-half times more likely to drop a grand on a new suit. And flying four times a year isn't exactly frequent, the study's co-author, Diane Williams, told me.

The `average' flier

The middle-aged men flipping past ads for Bluetooth headsets or steakhouse chains in the back of "Hemispheres," or the 20something strivers who pack the "consultant express" flights Thursday nights and battle for upgrades, i.e. the average frequent flier, actually fly nine times a year, meaning that some elite subset of road warriors at an even higher elevation is lifting that average upward.

Ironically, those at the pinnacle have gone native in Airworld, spending so much time aloft they're losing the impulse to consume. Living their lives out of a rolling suitcase and an expense account has rewarded them with millions of frequent-flier miles and bulging savings accounts-and they'd rather live off the former than the latter (see story P. 16). There may be as many as 1 trillion frequent-flier miles in circulation, calculated to be worth about a penny each, which means Airworld has an unredeemed currency reserve of perhaps $100 million.

Airworld's physical borders are fuzzy. Only half of American airports' revenues actually stemmed from flight in 2000, and with passenger traffic rising, flight's share can be expected to fall. The lion's share of non-flight revenues came from parking ($2.1 billion), followed by fees from rental fleets (another $1 billion). And those figures fail to take into account what might be called Airworld's suburbs, the sprawl of hotels and chain restaurants that a giant like Cendant has vertically integrated into a $20-billion-a-year empire.

Integration, franchising and licensing are the preferred methods of doing business here. On a stroll through Detroit Metropolitan Airport's gleaming McNamara terminal one Sunday afternoon, I tallied the brands present in the mile-long mall. One hyper-masculine corner packed in a Brooks Brothers outlet, a PGA Tour Shop, the "GM Experience" and Fox Sports SkyBox sports bar. I ate lunch at the Jose Cuervo Tequilieria, watched football at the Budweiser Brewhouse and developed faux-homesickness while eating a dog at National Coney Island Express.

During my three weeks in Airworld, I drank countless cups of Starbucks coffee and purchased The New York Times at newsstands variously named after FoxNews, CNBC and CNN.

Branding free-for-all

The branding free-for-all has been choreographed and is either owned or operated by HMS Host, the $1.6 billion franchisee that installed the restaurants at more than eight airports, or the Paradies Shops, which will generate $330 million in sales this year from 400 stores in 62 airports across North America. And then there is the Hudson Group, which sold 74,000 magazines a day in airports last year (27 million copies annually) and expects to sell $100 million worth of books in 2005.

"We're just a franchisee at the end of the day, and our territory just happens to be airports," said Elie Maalouf, exec VP-food and beverage at HMS Host. He and his peers happen to have natural near-monopolies there because the headaches involved in operating within Airworld-everything from higher construction costs to near-24 hour operations to FBI background checks for employees.

But both HMS Host and the Paradies Shops have evolved into Airworld's branding alchemists, mixing and matching interested parties from Column A with an airport amenity from Column B, leading to strange pairings like the Expedia.com Cafe or Casa Bacardi.

"We realized...we could create a fun experience that people could associate" with Bacardi, he said. "The customer allows you to do that because they're looking for a premium experience, you're bringing them a premium product."

The demographics, the density and the sheer population of 100 million travelers circulating has made Airworld irresistible to Clear Channel and JCDecaux, the airport "outdoor" giants that have out-maneuvered Viacom and swallowed up most smaller, more specialized competitors over the past decade. JCDecaux estimates the global airport market at $814 million annually, of which it controls around 30%.

JCDecaux won a 10-year contract for all three of the New York area's major airports last month, and the company is angling to land LAX, which recently put itself up for bid for the first time. Clear Channel will have its chance to strike back in the U.K., where the British Airports Authority's eight airports, including Heathrow, are about to come up for bid again-a contract estimated by some to be worth $900 million over 10 years.

While at Heathrow, JCDecaux Airport's managing director in the U.K., Don Sperring, took me on tour of Terminal One in an effort to teach me how to read an airport. As in any city, there are good blocks and bad ones, hopelessly cluttered public plazas and tony addresses that command premium rates. Billboards clustered around the lounges of British Airways are priced "four to five times" more than those in the teeming ticketing hall, he said. Not that there's a standard rate card to draw from.

"There is an enormous amount of elasticity, whether you're talking about airline tickets or the media for sale. The prices are this wide," he said, holding his arms apart, "and the market will more often than not decide for you. The equation might be something like, `We're getting X for this ad, and Y for that one, and 67 million passengers come through here each year, and how much wow-factor does the space have, and who else is interested in the space?' And then you say, `Right, that'll be £160,000."'

If Mr. Sperring and his ilk are essentially realtors always inventing new geography in hopes of squeezing out every last cent of revenue, then media planners and buyers like Lauren Barbara, senior partner-group director of MindShare's The Wow Factory, are the cautious clients. I spent a morning with her at JFK surveying the placement of new ads on behalf of her client Sprint. "There are good neighborhoods and bad ones, and you pay a premium for being on the right blocks."

The most impressive ad was a brand new, multi-story banner mounted on the side of a parking garage next to the international terminal. "It took us a year-and-a-half to win approval" for that location, said Craig Ferber, JCDecaux's senior account executive on the scene at JFK. He needed approval the Port Authority, and because the ad was conceivably visible from planes overhead, he had also needed the FAA's. "And that's a whole other ballgame," he said.

Airworld is rapidly evolving beyond the billboard. Mr. Sperring is bullish on the idea of branding terminal services, like Samsung's plasma screen continually broadcasting the BBC. Accenture has lobbied Clear Channel at O'Hare for interactive touch screens that double as Airworld guides and ads.

Advertisers are always finding new crevices and surfaces conducive to carrying ads. United Airlines has begun papering its jetways to the plane with sponsored wallpaper. "It's $5 million a year that drops straight to the bottom line," said Tom McGrane, director-media assets and retail programs for United. A startup named SkyMedia is rolling out ads on the tray tables of the new-and-improved post-bankruptcy US Airways.

Getting `clear'

Even airport security is being marketed to Airworld's most affluent consumers. "Clear" is the brand name of a verified identity card currently in use at Orlando International in Florida, where members pay $80 each year for high-speed shortcut through security enabled by storage of unique biometric data on file. "Orlando wanted someone who had figured out the branding, and who had done the customer research," said media maven-cum-security expert Steven Brill, the founder of American Lawyer and now Verified Identity Pass, one of the backers of Clear. He hopes to begin rolling Clear out at other airports soon, and the field is wide open.

The next test will be whether or not Airworld has the power to rebrand an entire nation. Emirates, the aggressive, wildly profitable airline based in Dubai, is being counted on as the heart of an airport that will pump millions of tourists into tens of thousands of luxury hotel rooms being built, along with four of the world's five largest malls. The new airport, scheduled for completion in 2020, will be the world's largest, purest manifestation of Airworld. I won't be the only one lost somewhere in transit.

On the Web

See the full report at AdAge.com QwikFIND aaq71o

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