INTERNATIONAL. As the global travel industry begins to get back to some normality following the downgrading of the UK terror alert yesterday, the travel retail industry is counting the cost of the past few days and assessing its response for the future.
While the prospect of a US-style ‘gate delivery’ system becoming an element of airport retailing around the world is being raised in some quarters – such a system was introduced for US flights at Buenos Aires Ezeiza Airport yesterday – most industry opinion believes the status quo can prevail, at least in most countries. The big question is when (or if) the US authorities will ease their requirement to ban liquids and gels from carry-on and what any subsequent policy will involve.
Here’s a round-up of overnight developments – The Moodie Report will update this story throughout the day so please keep checking back.
“From [today] you can buy anything you want airside for any flight except those to the USA where liquids and gels are prohibited“ |
BAA spokesperson |
UK – restrictions eased other than on US-bound flights
Congestion and delays are still badly affecting London Heathrow Airport and many travellers remain confused as to what they can and cannot bring to the airport and buy in the departures zone. But the situation is improving fast under the most difficult of circumstances for the airport operator, the airline, airport tenants and travellers.
A Virgin Atlantic spokesman, talking about London Heathrow and Gatwick airports, told BBC: “The delays are less and the queues are less. It is clear some of the measures put in place are working. There is no doubt that the picture is better from a passenger perspective.”
BAA’s eased rules were phased in fully this morning.
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A BAA spokesman told The Moodie Report yesterday: “From tomorrow morning you can buy anything you want airside for any flight except those to the USA where liquids and gels are prohibited.” No food or drink can be brought through initial security from outside the airport (along with a range of other prohibited items).
That seems clear enough – in short, duty free can get back to “˜normal’ on all non-US flights. BAA has not attempted to introduce any form of gate delivery for US-bound flights, no doubt preferring to see if the situation on those routes is clarified in coming days.
The company’s website www.BAA.com now spells out the situation succinctly:
Before security: All shops and catering outlets are open to all passengers. Hand baggage is now allowed BUT any liquids and gels must be packed into your luggage for check-in. Any other purchases must fit into your hand luggage.
Once through security: All shops and catering outlets are open to all passengers. If you are travelling to any destination except the USA then you can take all items purchased in the departures lounge into the aircraft cabin. All passengers boarding flights to the USA are not permitted to take any liquid or gel items into the aircraft cabin.
Asia Pacific – APTRA underlines industry compliancy
The Asia Pacific Travel Retail Association (APTRA) today welcomed the lowering of the terror alert in the UK and the subsequent easing of hand baggage restrictions on most flights – though US-bound routes are still being affected.
“We’re pleased that the duty free industry has quickly bounced back from this crisis, which had very severe and damaging business implications over the past few days,” said APTRA President Rakhita Jayawardena (pictured). “We’re hopeful of a full return to “˜business as normal’ in coming days.
“We would emphasise the security and compliancy of duty free shopping and the vital role that it plays in airport infrastructure development and the whole travel experience“ |
Rakhita Jayawardena, President, Asia Pacific Travel Retail Association |
“Let us be very clear on this – the duty free industry, both inflight and at the airports, is one of the most regulated and compliant in the world. Its products are subject to the most stringent of security checks at all points of the supply chain. And once again the industry’s stature and legitimacy has enabled it to bounce back from an external crisis affecting the travel industry.
“But the duty free industry, in common with its airport and airline operational colleagues, believes in putting traveller safety first. We understand the sweeping reaction taken by the various authorities but would emphasise the security and compliancy of duty free shopping and the vital role that it plays in airport infrastructure development and the whole travel experience.”
Hong Kong – skincare sales surge at Cathay Pacific
Cathay Pacific Airways is still selling all items inflight on all routes. Inflight Sales & Logistics Manager Cindy Lam tells The Moodie Report: “We are actually loading more skincare products on US and UK routes, knowing that passengers wouldn’t be able to bring liquid products onboard by themselves.”
But the airline is also alerting passengers travelling into Hong Kong and onto the US that they should not buy inflight before they transit, as goods will be confiscated before they board their US-bound flight.
Lam says: “We have a special PA announcement, alerting passengers transiting in Hong Kong and with onward connections to the US not to purchase liquor, perfume, creams, lotions, gels or other such ‘liquid’ items from inflight sales because they will have to go through a further security check at Hong Kong International Airport, prior to boarding their onward flight.”
US – Analyst suggests “˜modest’ impact on manufacturers
[Source: AFX International Focus]
“We believe the market has overreacted to news that airport security measures are negatively impacting travel retail beauty sales in the US and UK“ |
HSBC analyst |
Estée Lauder Companies will see only a modest impact from the recent slowdown in duty free sales linked to the crisis, according to an HSBC analyst quoted by AFX International Focus.
“We believe the market has overreacted to news that recently implemented airport security measures are negatively impacting travel retail beauty sales in the US and UK,” HSBC Global Research analyst Sandy Beebee said in a client note Monday.
Lauder’s shares closed up 19 cents to US$36.96 on the New York Stock Exchange on Monday. The stock had lost about -6% since the crisis began last Thursday to a Friday close of US$36.77.
Beebee said she expects Estée Lauder’s annual profit to decline by up to -4% due to the short-term dip in travel retail sales. Around 7% of the company’s sales are through the channel, a lower figure than many of its counterparts due to its dominance of the giant US domestic market. Beebee noted that only around 25% of these sales occur at UK or US-based airports.
‘It’s true that consumers have slowed purchases of beauty products and fragrances at airport retailers over the past two days to avoid delays at the boarding gate,’ wrote Beebee. But she believes the impact on high-end cosmetics manufacturers will be ‘modest, at worst.’
Singapore – Changi sales dip by -7%
[Sources: Channel NewsAsia; MediaCorp News]
Singapore Changi Airport’s sales of duty free liquor, perfumes and cosmetics fell by up to -7% over the weekend, according to Channel NewsAsia.
The report said that many passengers are still confused as to what they can and cannot take onboard UK and US flights.
“It could well be when you buy duty free goods, shops deliver it all the way to the gate”¦we are examining this as a possible solution at Changi“ |
Jeffrey Loke, Assistant Commercial Director, Civil Aviation Authority of Singapore |
Civil Aviation Authority of Singapore (CAAS) Assistant Commercial Director Jeffrey Loke said: “We would like to reiterate that the ban only applies to hand carry baggage on flights to US and on flights on US carriers. All other destinations are not affected by the ban and passengers can still bring on liquids and gels.”
The -7% dip in liquor, cosmetics and perfumes sales was partly down to consumer confusion as the guidelines changed almost daily, said the CAAS. Many passengers are preferring to err on the side of caution and not purchase duty free – even though their flights are not affected by the ban.
But the CAAS has acknowledged longer-term changes may lie ahead. Loke said: “It could well be when you buy duty free goods, shops deliver it all the way to the gate”¦ rather than you bring it to the gate yourself. Some of this is already practised at other airports and we are examining this as a possible solution at Changi.” UPDATE: Today the CAAS initiated exactly such a solution – click here for full story.
Changi retailers shops are offering refunds to those passengers who buy duty free goods but are unable to take them onboard their flights.
Canada – compensation touted
Airport duty-free shops want compensation as sales plunge
[Source: CBC News]
CBC News reported last night that The Nuance Group, which runs duty free shops in several Canadian airports including Toronto Pearson International and Vancouver International claims sales are down almost -75% since the crisis began [The Moodie Report is seeking clarification as to whether this number is transborder only or for all passengers – Ed].
The Canadian Air Transport Security Authority imposed a ban on almost all liquids and gels in carry-on luggage shortly after an alleged plot to blow up commercial aircraft was uncovered in Britain earlier this month.
The restrictions have affected sales of duty-free alcohol and perfumes.
The Nuance Group North America CEO Richard Rendek raised the issue of rent compensation to the retailer. He said: “Eventually we will come to discussions with compensation. We’ve already had indications from the airports that there will be discussions.”
Rendek said the company suffered similar losses during the SARS crisis in 2003 and 9/11, and that it has received rent relief during those periods.
