Hong Kong International Airport (HKIA) duty free liquor and tobacco operator Sky Connection has achieved record sales levels in the last year after an 11-month contribution from its new ferry arrivals shop concessions.

Sky Connection opened its first shops at the departure halls of the China Ferry Terminal and the Macau Ferry Terminal in August 2003, but was able to extend this business into the arrival halls last June.

The company has also expanded its operations with the opening of a new 3,000sq ft store at the new SkyPlaza complex in HKIA Terminal 2 and its new shops at the Lok Ma Chau border station are also due to open in July 2007.

Sky Connection Purchasing Manager Simon Au said: ‘With the newly acquired ferry arrival concessions coming on line in June 2006, we recorded historical highs in terms of sales and percentage growth. Despite some impact on LAG restriction [at the airport-Ed], the first quarter of 2007 remained strong.

?The outlook in 2007 continues to be very positive due to the recent change in allowances for returning HK residents. The trading conditions in Hong Kong and China today have shown big improvements.’

He adds: ‘However, the increased security measure has created confusion for travellers on whether they are allowed to bring duty free liquor on board. In the long run, unless the confusion is resolved, it will seriously affect duty free LAG sales if more bottles are being confiscated when transiting. We see the security issue being one of the key dynamics impacting our business in 2007.’

Sky Connection should also benefit from the new duty free allowances for tobacco and liquor that came into force on April 1. Now, all passengers are entitled to a duty free allowance of one litre of liquor and 60 cigarettes, 15 cigars, or 75 grammes of other manufactured tobacco.

Hong Kong identity card holders will have to spend 24 hours or longer outside the country to qualify for the allowance. The changes have been made to bring the allowance into line with the amounts permitted for local residents.

These changes represent a reduction in the tobacco allowance for non-Hong Kong residents from the current 200 cigarettes, 50 cigars or 250 grammes of other tobacco products. But there is a slight increase in the liquor allowance for Hong Kong residents who are now allowed a one litre bottle, whereas this was previously limited to a 750ml bottle of still wine.

Meanwhile, Sky Connection has also tendered for the three-year S$242m ($157.4m) Changi Airport duty free liquor and tobacco contract. ‘We have tendered for the Singapore Airport duty free concession and were ranked third and are waiting for a decision by the Singapore Airport. We are always looking to expand our business,? Au concluded.