Xi’an Xianyang International Airport in Shaanxi Province is to house China’s first walk-through duty free shop, as LSTR is also planning more duty paid store openings.

 

Wolfgang Weil, COO at Xi’an Xianyang International Airport told TRBusiness recently that the airport’s duty free concessionaire the China Duty Free Group is expected to open the new store this Spring: “It will be 650sq m to start with; also, a 500sq m future expansion is possible. Currently, in T2 they basically sell perfume and cosmetics and liquor and tobacco. The duty free retail space there is a little over 300sq m, so we definitely expect to get significantly more sales in our new duty free shop.”

 

Weil, said that the airport management, in which Fraport subsidiary company Fraport Asia Ltd holds a 24.5% share is excited: “When you convert a regular airport duty free area into a walk-through shop, the average increase in duty free revenue in airports worldwide like Antalya is about 30%,” he added.

 

Plans to open the new T3 international passenger pier with its seven air bridges coincide with fast growing international services at Xi’an Airport. Management explained that the new international pier being constructed is needed, as T2 is too small to handle the growing international passenger traffic.

 

 

 

INTERNATIONAL PASSENGER GROWTH: +30%

Last year, Xi’an Airport welcomed more than 29m international and domestic passengers, an increase of more than 12% compared with 2013 and well ahead of Xi’an Airport’s original 9.5% passenger growth forecast. “The growth rate is even over 30% for international passengers at Xi’an Airport,” said Weil. “We reached nearly 1.3m international passengers for 2014, so that’s slightly over 4% of the airport’s total passenger numbers,” he added.

 

Weil explained that the number of international passengers has nearly doubled over the past two years thanks to new destinations and more frequent flights to Hong Kong and Taiwan with larger planes. In addition to regional city-to-city flights in Asia, Xi’an Airport also offers non-stop flights to Paris, Helsinki and Moscow.

 

Airport management is expecting ‘a significant growth in international passengers’ of ‘easily 25% annually’ for the next few years, according to Weil: “The passenger nationalities depend on the routes, with AirAsia to Bangkok mostly Thai and Chinese passengers, while Finnair and Hainan Airlines (to Paris) we see more business travellers into Europe, connecting in Paris and Helsinki.”

 

Weil says duty free sales are increasing, but not only because passenger numbers are rising: “CDFG statistics show that currently perfume and cosmetics sales are lowest in north-west and north-east China. Liquor and tobacco are the biggest sellers here.

 

 

 

 

YOUNGER CONSUMERS FAVOUR PERFUME

“However, change in the Chinese passengers’ consumer behaviour is also rapid. Younger generations are purchasing more perfume and cosmetics than older. And duty free perfume and cosmetics sales in this airport are also driven by international passenger buying.”

 

The Terminal 3 development targets both Chinese passengers with its duty paid offer as well as foreign passengers visiting Xi’an. By contrast, new international branded outlets are also continuing to open in the T3 airside duty paid shopping area, increasing the range of products that departing passengers can choose from.

 

“We have a mixture of excellent duty paid international and domestic brands and operators in T3. We had to test some brands initially with our retailers and have adjusted the retail mix accordingly and even moved some shops. Right now we have the right concept,” said Weil.

 

“LS Travel Retail will open four new shop units, including two more fashion shops – MCM and Tommy Hilfiger – and a children’s wear shop. The new shop area could be realized by optimizing the entire zone. We have relocated a jewellery accessory shop to a new location and modified a performances stage area.”

 

 

 

LSTR IS A MAJOR DUTY PAID PLAYER AT XI’AN

The retailer already holds concessions for four luxury boutiques selling Salvatore Ferragamo, Hugo Boss, Coach, and Paul & Shark fashion goods. These boutiques occupy 460sq m in total. The Salvatore Ferragamo boutique is the largest at 161sq m, followed by Hugo Boss (114sq m), Coach (102sq m) and Paul & Shark (83sq m).

 

LS Travel Retail also holds the duty paid perfume and cosmetics concession in T3 which consists of two outlets and two promotion stands, as well as a duty paid international wine shop which is operated with a mainland partner in the airside shopping area.

 

In total, LS Travel Retail operates 21 outlets in Xi’an Airport, of which 18 are in T3 and three are in T2, where the company took over an electronics shop and introduced its Discover and Relay F&B concepts.

 

Meanwhile, to increase dwell time for departing passengers in the duty paid retail and F&B area, Xi’an Airport has also adopted a central departure area design concept that was developed with the London-based Design Solution.

 

[This short report is part of a comprehensive in-depth article on Xi’an Xianyang International Airport, which will be published in the China’s Century Conference magazine and distributed exclusively to delegates at the Shanghai event between 10-12 March, 2015. Registration for the 2015 TFWA China’s Century Conference is open until 20 February at www.tfwa.com].