Lojas Francas de Portugal (LFP), the joint-venture between Dufry Group (49%) and Vinci Airports (51%), is to terminate its existing inflight retail business on TAP Air Portugal flights at the end of the year.

LFP, which also operates more than 30 ground stores in Madeira, Porto, Lisbon and Faro airports and at three international airports in Azores (Ponta Delgada, Horta and Santa Maria) has ran the TAP Air Portugal onboard concession for 20 years.

The news comes as a further blow for the inflight retail industry, following the announcement in March that KLM is to end its tax free programme on all flights in January 2020.

DIGITAL OPPORTUNITY

In the case of TAP Air Portugal, however, passengers will still be able to purchase inflight, courtesy of a new LFP reserve-on-board digital solution.

A new app will be incorporated into TAP Air Portugal inflight entertainment systems and be available on passengers’ own devices. The concept is expected to be implemented from mid-summer or September.

An initial trial will take place on TAP Air Portugal flights from Rio to Lisbon. Passengers will have the opportunity to reserve their products inflight and collect on arrival in LFP stores at Lisbon Airport.

The existing inflight duty free service will run alongside the new digital retail concept until the end of the year. The digital solution will then be rolled out on all TAP Air Portugal routes, meaning passengers will be able to collect products at all TAP Air Portugal destinations.

Ana Rita Aragão, Inflight Sales Director, Lojas Francas de Portugal told TRBusiness: “TAP Air Portugal is renovating its fleet. For the past three years they have had new personnel at the top with new ideas and new thinking. One thing they knew they had to do was renovate the fleet as it was becoming too old.”

She added: “In order to create extra space for more seats on the new planes, they are reducing space in the galleys where there would normally be trolleys carrying food and duty free products.”

Aragão, who will oversee this new digital project, is disappointed about the pending cessation of the existing inflight retail business, which is the most profitable in the company. “It is a pity, because TAP is a very good airline with a good onboard retail operation.

“It is also a very profitable business, not only for us as the operator, but also for the airline and crew members who earn commission on sales.”

In past years, TRBusiness understands LFP has generated annual sales of up to €10m ($11.2m) from the inflight business. Last year, however, sales were believed to be half that figure. “In 2018, we only had long-haul flights to and from countries such as Brazil and the US offering inflight duty free products. Inflight retail was stopped on EU flights,” Aragão explained.

SURPRISE FACTOR

That said, she still expressed surprise on hearing about the planned termination of the existing duty free service. “It is not surprising when some airlines decide to stop selling duty free, but with TAP, it is completely the opposite as the inflight retail business is huge.

“Overall, it is such a shame because inflight retail is something that occupies passengers.”

A much wider product range including fragrances and cosmetics and gifts will be available via the digital solution, according to Aragão. “We will obviously offer more products and the range will be much bigger.

“The aim is to also have different products, in the same way we have inflight exclusives under the current model.

“If we don’t offer different and unique products, people will question the benefit of purchasing inflight as opposed to on the ground.”

Looking ahead to the implementation of the new onboard digital retail service, Aragão is realistic about its chances of success. “Once a passenger boards the aircraft, he/she has already seen beautiful shops.

“Reading an inflight retail catalogue or seeing the trolley often prompts travellers to purchase something they have forgotten or to buy on impulse. If they don’t see a trolley, catalogue or something that captures their attention, they will either drink, sleep or watch a movie.”

She continued: “I believe in this new project, but let’s be realistic. There will never be the same possibilities with this new model as there is with the existing one.

“Obviously I hope I am wrong, but this is the reality. We are competing with a lot of websites which offer free home-delivery.”

Delayed flight arrivals could also be an issue. “What happens if a passenger reserves a product inflight and the plane arrives late? Will he/she go to the store to pick up the products or just forget about it?”

Offering her own take on the current state of the inflight retail market, Aragão concluded: “If the inflight retail business was in such a bad state, why would the big perfume and fragrance houses have special inflight retail departments and specialised products for inflight?”