Hard truths for airline retailers at ARC

By Kevin Rozario |

The inflight offer came under scrutiny in the closing session of the final day at the Airline Retail Conference this week when the discussion focused on how the introduction of wifi – now increasingly available on flights – might see sales from the concessionaire’s cart migrating to web retailers such as Amazon.


The final panel discussion – the only one of the day directly focused on the duty free and travel retail business –was entitled What is Retail Actually About?.


Moderator Chris Tarry (right), Principal of aviation consultancy CTAIRA set the scene by pointing out that the airline industry remained a notoriously difficult one in which to achieve profits, and that more airline failures were inevitable.


In this light, retail’s chief role is to deliver more revenue, he said. But what form this retail would take in the future was hotly contested.


In sceptical mood, Peter Davies (below centre), former CEO of Air Malta said that the focus had to be on profit and not just revenue, adding: “Airline retail is not the utopia that people claim. Does it have the right impact on the bottom line and does it generate profit?”


Joe Harvey (below left), Chief Sales & Marketing Officer at South Africa-based global inflight concessionaire, Tourvest, admitted that there was work to be done to get inflight sales right. “We are not customer centric and need to work with the airline to develop the retail offer with, for example, products passengers don’t see elsewhere. Where we are going wrong is that if you open 20 airline (shopping) brochures, they are all the same in terms of products.”



But Tarry took the view that the brochure could be dispensed with altogether: “You could just take duty free off and use the IFE (inflight entertainment) system instead.” Drawing on his long experience of the market he added: “Some 25 years ago British Airways [currently a Tourvest inflight client although the business is now under tender-Ed] had a separate Japanese catalogue but now they can just do it online, selling more expensive products – so why not?”



Harvey’s retort was that some 60% of inflight purchases were impulse driven and that different routes could be leveraged better by delivering specific offers to specific nationalities. He cited African countries and routes [a market where Tourvest is an expert-Ed] and said: “Some passengers save their money especially for inflight shopping.” He also added that not all parts of the world have the technology and/or logistics to develop an online offer.


Davies maintained his stance, saying: “People don’t fly just because the retail on board is better.” He added that as a CEO he would not want to lumber an airline with a revenue stream that was not a major one. “I have to maximise profit per passenger.”



At Monarch Airlines, Julian Wheway (above right), Head of Insight & Innovation, pointed to grander ambitions: “I am hoping we can become a John Lewis of the future.” While he did not elaborate on how, he pointed to the fact that along the passenger ‘journey’ from ticket booking to arrival back home, airlines are not involved with some two-thirds of it. So therein is an opportunity.


Wheway also suggested that airlines should talk about their gross profit in terms of ticket and retail sales combined, but Davies was adamant that adding a highly variable element like retail to a fixed/guaranteed income of a seat sale was not the best way forward. Wheway’s response to that: “The (airline) industry has not made any money in the past 40 years – we have to do something.”

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