The recent soundings at the TFWA Conference in Cairo by Keith Spinks, the European Travel Retail General Secretary, refer to the latest and “most worrying threat for the Duty Free Industry” which allegedly comes from airline baggage and ancillary revenue initiatives. In particular Keith cites the new charges and controls introduced by Fort Lauderdale based LCC Spirit, who have now restricted on-board carry on baggage and introduced charges in an attempt to restrict passengers' luggage, so to improve aircraft loading and turn around times.
Any European who has travelled in The Americas would have watched with bemusement at US travellers bringing “everything but the kitchen sink on board” and You Tube recently created a star with the flight attendant who walked off the aircraft after being hit on the head by cabin baggage.
Perhaps Spirit have discovered what Michael O’Leary discovered some time ago, that if you can move your aircraft off the stand quickly, airlines can make more money by reducing their cost base.
Spinks was quoted in the duty free media saying that this was a worrying trend which could cause major problems for duty free sales if this ancillary revenue initiative permeates throughout the airline industry.
The other point of view could be “is the cup half full or half empty” as airlines are an integral part of the duty-free environment and many, if not most, already conduct on-board sales of duty free or travel retail goods. It is suggested that any expansion of this initiative could well prove a threat to ground based outbound retail sales from airside airport shops, but there is no evidence to suggest that these sales would not be transferred to the airlines, nor that the airport retailers, who are rapidly expanding their “arrivals shopping facilities”, could not recover these sales in the baggage hall or via the internet. Furthermore, Duty Free sales within the European Union do not actually exist, so there is no legislative reason why these airport "travel retail sales" cannot be conducted on arrival, rather than on departure. For this reason the climate of threat would seem premature and somewhat negative.
Cruise and Ferry Operators are also an integral part of “The Industry” so how would such baggage rules and charges inhibit their business? Just around the corner from Spirit Airlines at Port Everglades, Cruise Operators already restrict goods coming on-board their ships and they store or charge corkage on some duty free liquors, yet this practice has been around for some time now, without it being deemed as a major threat.
Perhaps the perceived threat to The Industry is the fear of a changing travel retail environment, the accelerating ancillary revenue bandwagon and the ability of some airports or their concessionaires to adapt quickly to this new world order? Or even the airports' ability to shrug off their historical retail strategies, where the "captive audience" marketing mentality prevails?
Airlines have discovered a mechanism to enhance their income and it is highly unlikely that they will neglect these new revenue streams, many may be careful as to how they introduce new initiatives, but they will now explore every avenue to enhance revenues.
Evidence of this is clearly seen from the expanding Ancillary Revenue Conference circuit, which is starting to compete with the traditional TFWA exhibitions. The latest offering is due in Macau in January 2011. This will soon be followed by similar events in Dubai and Buenos Aires. All potential revenue streams will be discussed and considered in detail by those attending.
Perhaps the real issue here is “who owns the customer” and “do people fly because they want to go to an airport, or are airports there because people need to fly”? Duty Free consumers' greatest need is accurate and detailed information in relation to their shopping intentions, so that they are comfortable to spend, rather than the fear of the unknown which will inhibit spending. Could this lack of proper information be a greater threat than on-board baggage charges?
No doubt the debate will continue and more threats will surface. More than likely via the internet.
The King is dead, long live the King!
check before you fly www.dutyfreeonarrival.com
Spinks was quoted in the duty free media saying that this was a worrying trend which could cause major problems for duty free sales if this ancillary revenue initiative permeates throughout the airline industry.
The other point of view could be “is the cup half full or half empty” as airlines are an integral part of the duty-free environment and many, if not most, already conduct on-board sales of duty free or travel retail goods. It is suggested that any expansion of this initiative could well prove a threat to ground based outbound retail sales from airside airport shops, but there is no evidence to suggest that these sales would not be transferred to the airlines, nor that the airport retailers, who are rapidly expanding their “arrivals shopping facilities”, could not recover these sales in the baggage hall or via the internet. Furthermore, Duty Free sales within the European Union do not actually exist, so there is no legislative reason why these airport "travel retail sales" cannot be conducted on arrival, rather than on departure. For this reason the climate of threat would seem premature and somewhat negative.
Cruise and Ferry Operators are also an integral part of “The Industry” so how would such baggage rules and charges inhibit their business? Just around the corner from Spirit Airlines at Port Everglades, Cruise Operators already restrict goods coming on-board their ships and they store or charge corkage on some duty free liquors, yet this practice has been around for some time now, without it being deemed as a major threat.
Perhaps the perceived threat to The Industry is the fear of a changing travel retail environment, the accelerating ancillary revenue bandwagon and the ability of some airports or their concessionaires to adapt quickly to this new world order? Or even the airports' ability to shrug off their historical retail strategies, where the "captive audience" marketing mentality prevails?
Airlines have discovered a mechanism to enhance their income and it is highly unlikely that they will neglect these new revenue streams, many may be careful as to how they introduce new initiatives, but they will now explore every avenue to enhance revenues.
Evidence of this is clearly seen from the expanding Ancillary Revenue Conference circuit, which is starting to compete with the traditional TFWA exhibitions. The latest offering is due in Macau in January 2011. This will soon be followed by similar events in Dubai and Buenos Aires. All potential revenue streams will be discussed and considered in detail by those attending.
Perhaps the real issue here is “who owns the customer” and “do people fly because they want to go to an airport, or are airports there because people need to fly”? Duty Free consumers' greatest need is accurate and detailed information in relation to their shopping intentions, so that they are comfortable to spend, rather than the fear of the unknown which will inhibit spending. Could this lack of proper information be a greater threat than on-board baggage charges?
No doubt the debate will continue and more threats will surface. More than likely via the internet.
The King is dead, long live the King!
check before you fly www.dutyfreeonarrival.com
3 comments:
The quicker the day "duty free on arrivals" comes the better for us customers. We are sick of lugging extra bags round the world when it is totally unnecessary. Operators of these retail outlets should wake up and embrace the change... it is coming sooner rather than later.... don't fight it!!!
Time is money. Just ask the financial manager of any airline. The longer the plane sits on the ground the more this time impacts the profit margins of each flight sequence.
Duty Free items and cabin baggage carried onboard during departure greatly effect the turn around time of the airlnes. Spirit Airlines is creating a model of the future and more airlines should consider these restrictions.
The obvious and profitable solution for all airlines is to impliment "duty free on arrival".
The airports and airport retailers have no business telling an airline they must haul duty free freight, suffer boarding delays, and deny ancillary revenue.
The airlines own the customer. The airports and retail shops should not be allowed to dictate to any airline what they must carry and how they generate money.
It is time for a change in the industry. Grab your "duty free on arrival" and everyone wins.
The world changes and businesses have to adapt/change or fade away. The airlines are not going to lose the opportunity to earn extra revenue, so the charges levied by Ryanair, Spirit et alia are not going to diminish - far from it, other airlines will follow suit.
Why don't the European Travel Retail people realise that traffic coming in is equal to trafic going out? So if you can't sell to paasengers when they leave, change your tactic and sell to passengers when they arrive.
This means real duty-free facilities on arrival for passengers entitled to buy duty-free, and a more aggressive attitude to the 'travel retail' side of the business for other incoming passengers. And - most important - INFORMATION to the passenger. If I know that I can buy on arrival at Sydney - for example - why should I carry stuff on board, especially if I have to transit en route?
So the airport duty-free shop loses when I leave, but if they adjust their approach to the business and INFORM me, they will make a sale when I return.
What do we passengers need? A suitable structure and INFORMATION.
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