AUSTRALIA/NEW ZEALAND. Ivo Favotto, a Sydney-based executive and company owner who has worked for all three stakeholders in the Trinity ecosystem, presents his latest commentary and figures on the gradual re-emergence of airport commercial activities in Australia and New Zealand against the backdrop of a global pandemic now stretching into its third year.
Favotto owns and runs The Mercurius Group, a consultancy focused on industry research, consultancy and benchmarking studies, as well as operating his own destination merchandise supply business.
In the latest edition of his unique monthly report tracking the reopening levels of an initial 832 travel retail outlets across Australia and New Zealand, Favotto assesses the continuing stop-start nature of the recovery. Amid the Omicron variant’s continued surge, his findings underline the frustration felt by airport management and their commercial partners on both sides of the Tasman.
First we had official lockdowns enforced by government health orders, heavy fines for miscreants and police roadblocks (aka ‘the ring of steel’) but offset by generous government support payments for companies (called JobKeeper) and for individuals (called JobSeeker).
Now we have the ‘Claytons’ lockdown. For the uninitiated, Claytons is a brand of non-alcoholic beverage that was heavily marketed in Australia and New Zealand in the 1970s and 1980s as a whisky alternative in terms of colour and packaging. It gained notoriety through an advertising campaign that declared it ‘the drink you have when you’re not having a drink’. The term Claytons subsequently became associated in the region with adjectival and often insulting descriptions of various subjects that are either a poor substitute for the original (as in Ivo, you’re a Claytons journalist) or are essentially the same thing but go by a different name.
So now we’re having the Claytons lockdown – the lockdown you have when you’re not having a lockdown. Official lockdowns are over – except in Western Australia which seems to be marching to the beat of a different drum to the rest of Australia and New Zealand. But the rapid spread of COVID-19’s Omicron has resulted in many people self-imposing their own lockdowns. Across Australia, travel and restaurant bookings are being cancelled by people just too scared of catching COVID-19 as they watch infection volumes soar and hospitalisations and the death toll rise – despite last two indicators being lower than with the Delta variant.
And of course, in a Claytons lockdown, there is no (or much more limited) government support. JobKeeper has gone the way of the dodo bird (i.e. into extinction) while JobSeeker’s eligibility criteria have tightened significantly.
So it is little surprise that travel retail’s nascent recovery that we saw in the last months of 2021 has since stagnated.
According to The Mercurius Group’s 21st monthly report tracking the recovery of travel retail in Australia and New Zealand from the pandemic, just 56% of travel retail stores that were trading pre-pandemic were open in January 2022. That is similar to December 2021 as the Omicron variant stalled hopes of recovery during the festive season.
In terms of outlet type, January saw the number of open F&B outlets increase marginally to 59% but total specialty outlets decrease marginally to 53%. The respective small swings left total outlets open at 56%, equivalent to December 2021.
However, the reality is likely to be less than 56% as the Omicron variant wreaks havoc with staff availability and supply chains. For some operators, it’s a day-by-day proposition as to whether they have sufficient staff and stock to be able to serve whatever customers there may be in airports – a situation mirrored in the local market where many restaurants that could be open are forced to close.
Australia’s international borders are still far from fully open [though since this article was written, the Australian government has announced the reopening of international borders to all fully vaccinated visitors from 21 February -Ed] and New Zealand’s recently announced five-step plan to re-open borders (commencing 27 February) will take almost ten months to implement fully.
Consequently, the majority of openings continue to be in the domestic terminals where 70% of outlets across the two countries have reopened, compared to just 25% in international terminals. As a result, duty free retailers and currency change providers remain by far the hardest-hit sectors among airport commercial operators.
With the welcome easing of border restrictions ahead on both sides of the Tasman but Omicron still surging, it remains to be seen how long the Claytons lockdown continues. Hopefully we’ll be back to drinking real whisky soon.
| A Tale of Two Cities (continued) For the past eight months , The Mercurius Group has been tracking the rate of travel retail’s recovery from COVID-19 in two airports of similar scale on different sides of the planet – Melbourne Airport in Australia and Manchester Airport in England. At the beginning of our analysis in June 2021, Melbourne Airport had almost twice as many as retail outlets reopened versus the pre-pandemic level compared to Manchester Airport. But as passenger traffic at the northern UK airport recovered and more outlets began trading, Manchester overtook Melbourne in proportion of pre-pandemic outlets open by August 2021.  While this is still the case, Omicron has slowed the rate of passenger recovery at Manchester Airport. Passenger numbers in December 2021 represented just 46% of December 2019 levels – compared to 54% a month earlier. As a result, the travel retail recovery has slipped marginally with the proportion of open outlets falling from 60% in December 2021 to 59% in January 2022. Nevertheless, Manchester Airport management remain confident of a strong recovery as flight bookings surged mid-January following the removal of COVID-testing requirements. Meanwhile Melbourne Airport has seen a welcome boost in passenger numbers – December 2021 levels were 34% of December 2019, up from 12% in November 2021 – as lockdowns ceased and travel started to reopen. This drove a marginal increase in outlets open to 48% in January, up from 46% a month earlier. |
