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The 23rd ACI Europe Trading Conference & Exhibition is taking place in Zürich, and will be held in Milan next year |
SWITZERLAND. The 23rd Airport Trading Conference & Exhibition began in Zürich yesterday, with a focus on partnership between stakeholders, technology in travel retail and the consumer of the future.
Among the highlights was host Zürich Airport’s update on its ambitious commercial project, The Circle, which opens in 2018. The project was initially announced in 2009, but work is finally set to begin next year.
CEO Thomas Kern told delegates said SFR1 billion The Circle development would become a second centre for the city after the famed Bahnhofstrasse shopping street. “It will be positioned as a new premium offer for global and local clientele,” he said. “The Circle will be a destination in itself, with retail, entertainment, art galleries, conferences, hotels and medical centres. It will be a focal point for business and lifestyle.” There will be a major retail square at its heart, dominated by Swiss and international brand names.
Kern said The Circle would augment the existing two major shopping locations at Zürich Airport, the Airside Center and the landside Airport Center. He noted the growth of the commercial business at the airport, with retail and food & beverage generating SFR540 million in revenues last year. Arrivals duty free sales have grown at double digits in each of the three years since it was introduced, he added.
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Zürich Airport CEO Thomas Kern (above) and Senior Vice President Commercial Patrick Graf outlined their airport’s commercial ambitions |
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ETRC President Sarah Branquinho also spoke on Thursday morning, and called on Europe’s airports to urge their governments to support new Air Passenger Rights legislation. The European Parliament has already given its approval to the amended legislation, which enshrines passenger’s rights to carry shopping onboard in addition to their other hand luggage.
The EU Council of member states is now debating the legislation and countries are expected to finalise their positions by June.
“We estimate that there has been €1 billion in lost sales in the past five years and that 25% of passengers have been dissuaded from buying [by the restrictions imposed by some airlines on taking shopping onboard],” said Branquinho. “We now have a short window of opportunity to influence member states. We urge you to engage with your Transport Ministers to support the revision of the Air Passenger Rights legislation. It’s an opportunity to establish the right to shop and fly.”
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How countries are lining up to support or oppose Air Passenger Rights legislation |
Currently, according to ETRC and ACI, governments including those of the UK, Netherlands, Ireland and Poland are opposed [several on the grounds that they prefer not to interfere with the market], with a number of others undecided. The slide on this page shows which governments are in favour and those opposed. (Some states are not listed because of conflicting information regarding their positions).
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Olivier Jankovec: The outlook is improving for air traffic but the industry continues to face big issues from airport capacity to the one-bag rule |
ACI Europe Director General Olivier Jankovec delivered his state of the industry address, with a broadly optimistic outlook for traffic and business in 2014, though he noted the uncertainty over economic recovery, political tensions, the taxation of air travel in some countries and the structural realignment of airlines in Europe. Jankovec noted that some 42.5% of Europe’s airports are loss-making (and 65% of those handling fewer than 1 million passengers).
ACI Europe is forecasting +3.2% growth in passenger traffic year-on-year in 2014 but growth is expected to be slower in the longer term, at around +1.8% to 2035.
Jankovec also underlined the vital role of commercial activities to airports as many seek to “de-risk” the business. Commercial revenues at the region’s airports climbed by +35% between 2009 and 2012, with retail concession income to airports up by +48% in the same period.
Many of the issues Jankovec covered were detailed in a recent interview with The Moodie Report. Click here to access that interview.
Monocle Editor-in-Chief Tyler Brûlé delivered the keynote address, offering a critical view of the travel experience today. He noted that airline travel in Europe today was a “very basic experience with no innovation” and suggested that we would see a “return to dignity” in the years ahead as even low-cost carriers improve their offer.
Noting some potential influences on the future of travel and travel retail, he said the industry needed to cater more to Thai consumers, who he described as “the new Japanese” in outbound travel terms. “The industry needs to adapt to their needs in the products offered, marketing and distribution channels. Thais are the new luxury goods consumers.”
Of the airport experience, he said: “You talk up differentiation, innovation and Sense of Place, but very few airports really deliver that. You employ the same architectural firms and consultants to design airports, which are largely placeless places. Why not ask a local firm to design your next F&B offer, to see what they can create?
“There is also a predictability about the brands you see in duty free. They are the same everywhere. Also, does the “˜duty free maze’ after security really work, or does it generate resentment? I’m an adult and I know when I want to buy something. Do I need to be led through a shopping mall after security?
“In food & beverage too, there is very little in the way of surprise. In both retail and F&B I’m prepared to buy if I can find something different to downtown, which is why I like Helsinki Airport. I can buy their reindeer, honey or caviar and spend €500-600 easily on gifts when I fly to Asia.
“What other airports are getting it right? Auckland has a very pleasant Departures experience, Narita does an excellent landside retail offer, Hong Kong International has the best news & books offer – it’s curated and offers variety and surprise – and at the same airport Cathay Pacific’s The Bridge lounge is the benchmark for lounges. Tokyo Haneda has superb outdoor spaces, Sapporo Airport has a great culinary mix, Oslo has authentic Nordic design and here at Zürich there’s the unique and local Sprüngli store.”
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Tyler Brûlé: An outsider’s perspective on the airports industry |
Two panel discussions followed on Thursday, the first featuring Mondelez World Travel Retail Region Director EU Thomas Bodenmann, LS travel retail EMEA COO Vincent Romet, Caviar House & Prunier Chairman & CEO Peter Rebeiz, Copenhagen Airports Director Airport Sales Lise Ryevad and Geneva Airport Director Finances, Commercial & Development Pierre Germain.
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Peter Rebeiz: The industry should seek to reintroduce the “adventure of travel” |
The two airport companies noted how they planned to convert more passengers into shoppers, notably with the use of technology and by generating loyalty. Romet noted how the new Aelia Duty Free brand (covered here) was one tool in LS’s’ drive to change from a “transactional to experiential relationship” with its customers. He also noted how digital and social media could become an “enabler” of sales. The company plans to use iBeacon technology to target travellers through their smartphones directly with offers and promotions within 10m of the stores. “We want to manage all of the various digital and material dimensions to create the next generation of travel retail stores,” he said, previewing the new Aelia Duty Free brand.
In the same session, Rebeiz noted how the industry needed to reintroduce what he called the “adventure of travel” through improving the experience, telling stories and offering value for money.
A later panel to discuss partnership was led by Luxottica Global Travel Retail & Special Channels Director Francis Gros, in which he invoked the ideals of Trinity espoused in the 2003 White Paper, noting that partnership in the industry requires joint and sustained commitment between airport, retailer and brand owner.
Nuance CEO Europe Andrea Belardini and Zürich Airport Senior Vice President Commercial Patrick Graf spoke jointly about partnership, with each assessing the risk to their own businesses of the current concession model. Separately, Fraport Group’s Ute Pohl and Gebr Heinemann’s Raoul Spanger talked about their 42-year partnership, and the factors behind their close cooperation.
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Two panel discussions featuring leading airports, brand owners and travel retailers were among the day one highlights of the event |
In a stirring close, Eriksson & Partner’s Peter Eriksson (former head of commercial at Zürich Airport) outlined some “illusions” he said were prominent in the industry.
“One illusion is that we in travel retail lag behind the High Street. It does not most of the time so we should not talk ourselves down. We should also not over-state the role of social and digital media. It has its place as a tool but don’t spend a lot of time and money on this – people don’t want to be bombarded by messages constantly while they travel.
“On the concessions side, I think most airport contracts are inflexible, punishing and protectionist. They are not about everyone making money and they don’t honour success and achievement.
“We should have contacts that are long-term (seven year-plus), top-line focused, flexible with early termination options and fair so that profitability can be achieved by all parties.”
He also urged airports to do more to improve their food & beverage offers – “one of the USPs of any airport” – and to realise the potential of destination merchandise, which should command far more space than it does at airports today. He also said airports should “avoid the luxury trap”, where many commit 80% of space to categories that only cater to 20-30% of passengers.
The final session of the day saw delegates split into four “˜Unconference’ workshops. These were led by World Duty Free Group Corporate Communications & Innovation Director Aurora Rato, Nice Airport Chief Commercial Officer Filip Soete, Oslo Airport Manager Retail Development Roar Odegaard and InterVISTAS Director Johan Scholvinck.
