As of Tuesday 26 June, Sweden’s Inflight Service has suffered the fallout of bankruptcies from two of its airline concessionaire partners within just two months. Kevin Rozario talks to Inflight Service CEO Björn Ulfberg about the situation and what happens next.

Air Finland’s bankruptcy is not a total shock but as it is the second of your airline clients to collapse what impact are you expecting?

We are of course very sorry to hear that Air Finland went bankrupt as it impacts the people we have been working with, and it was a growing and very healthy travel retail business over recent years. It also leaves passengers exposed to monetary loss or simply the loss of a planned holiday with the family which is especially sad in times like these. There is an impact from a bankruptcy on our business but in this case, the scale of it is manageable. With only one plane in operation at the time of the Air Finland bankruptcy, the financial losses to Inflight Service (IFS) were minimal.

What about the longer-term situation in the market?

The longer-term impact on the business is yet to be seen as it depends on who will pick up the passengers Air Finland was transporting for other tour operators. Given our market share (in the Scandinavia region), we tend to pick up a good proportion (if not all) of the continuing business that goes elsewhere (as was the case with Cimber Sterling, which was the first customer that went bankrupt for IFS earlier this year) so the financial effect we expect from the Air Finland and Cimber Sterling bankruptcies combined is very limited.

When you say ’very limited’ do you mean you expect this year’s IFS performance to be largely unaffected?

Well, for example, as Cimber Sterling was a new customer to IFS in 2012, our ability to pick up the remaining business leaves us with an expectation of a slightly incremental business for 2012 versus a year ago for the two customers. Overall, IFS’s airline retail division is predicting a very strong year in 2012 with continued growth stemming from improved conversion rates and increased sales per passenger. We have learnt a lot about how to manage changing consumer behaviour in 2008/2009 [the global financial downturn after the Lehman Brothers collapse-Ed] which we are applying again this year while adding further measures to counter changing consumer behaviour (predominantly last-minute shopping). This is paying dividends for us and helps to increase confidence despite the difficult macro-economic situation.

And regarding those macro conditions, how do you see the bigger picture in Scandinavia?

Overall the industry is under severe pressure and while other players tend to pick up part of the business managed by companies that disappear, we are carefully monitoring the market development to avoid further impact on our business. With dreadful weather at the start of the summer in the Nordic countries, we can only hope tour operators respond swiftly and increase the number of trips available so that something good comes from the bad weather, and that the industry gets some breathing space for the balance of the year.

[A detailed report on IFS’s new web-based portal for pre-order inflight sales across several airlines and its development strategy is in the June issue of Travel Retail Business magazine’s Inflight Review.]