Aer Rianta International’s (ARI) Anthony Kenny has reflected on the travel retailer’s operational tenure at Auckland Airport (AKL) after exiting the business earlier this year.
Speaking to TRBusiness in an exclusive video interview, ARI’s Chief Commercial Officer and Deputy CEO doesn’t rule out a possible re-bid for the concession should the right contract conditions present when the new duty free tender eventually surfaces.
As reported, ARI exited AKL in late May, bringing to an end a business it had operated since 2015 [ARI and then known LS Travel Retail Asia Pacific were awarded contracts that year to jointly run the duty free departures and arrivals business – Ed].
Lagardère AWPL began trading as the sole duty free partner at AKL on 1 June this year, several months earlier than expected, after the landlord fast-tracked the transition to the single-operator model it announced at the end of 2022.
Lagardère will operate as the airport’s duty free sales incumbent after winning a contract extension until mid-2025.
Merit in joint-operating models?
AKL previously said that it expects to launch a tender for a long-term duty free contract within the next year.
Speaking to TRBusiness, Kenny acknowledged ARI’s disappointment at the turn of events but was unequivocal in stating that the company remains proud of its track record in operating the business in New Zealand.
“We had great shops, brilliant colleagues, great brand partners,” he said. “It’s just one of those things in travel retail; sometimes you win, sometimes you lose when it comes to tenders.
“What we are really proud of – along with having a great business – is how we transitioned. We worked well with Lagardère in making sure there was a transition that worked for the passengers going through the airport, and the vast majority of our colleagues transferred across to Lagardère and we supported colleagues that didn’t transfer to Lagardère.
“Pretty much everybody that worked with us is in employment somewhere else and we’re really proud with regards to how we looked after people. That was our biggest consideration as we exited the business. We wanted to leave with dignity and we did.”
While stopping short of confirming a bid for any new duty free contract, Kenny did not rule it out completely, confirming that ARI would study any terms to assess whether these would offer commercial potential.
On the dual operator model more generally, Kenny observed that such a setup can work when there is exclusivity of categories, but where competition occurs within core merchandising, it becomes more challenging.
“Certainly, it is a more difficult model to operate in than a single-operator model,” he said. “It comes down to the terms of the tender, the concession contract and could you make it work. It all comes down to contractual terms.”
Expressing satisfaction at ARI’s trading performance in 2023 year-to-date, Kenny points to momentum in passenger average spending at the end of 2022 that has graduated into this year.
“We’ve had very strong spend across the estate and a lot of that is on the back of the launch of our revitalised brand identity and expression, ‘Joy on Your Way’. We’ve had really strong activations and marketing campaigns and that has translated into very strong passenger average spend.
“Aligned with that, we can see everywhere that passenger volumes have really gained recovery from the Covid era and an awful lot of our businesses now have passenger volumes at or approaching pre-Covid levels. Others [locations], not yet – but are fast approaching that too.”
As reported, ARI introduced its refreshed brand language in February this year, in what Kenny calls “a culmination of 18 months of really intense strategic work with colleagues and partners across the globe”.
At its heart, the brand facelift is designed to underscore the elements of human connection while strengthening the so-called ARI value proposition and offer to its customers, colleagues and partners.
‘Flag in the ground’ in Vancouver
For ARI’s internal teams, the move has “deepened motivation again”, while “giving a consistency, cohesion and clarity with regards to all our brand activities”, explained Kenny.
“Our partners are really happy with it, because passengers are really happy,” he continued. “It is a journey and we are working more on engagement programmes because it’s a continuous growth and transformation.”
In a discussion touching on a number of subjects, from headwinds such as the inflationary-driven environment – not set to cool for some time yet – to Gen Z consumers and offering value and convenience in the travel purchase journey, Kenny also updated on ARI’s wider concessions business, including in Portugal, Abu Dhabi and India.
He pointed to two important anniversaries that have taken place this year, in Portugal and Canada.
June marked the one-year anniversary of the Dublin-headquartered travel retailer’s operations in Portugal, where it oversees 34 duty free and duty paid spaces at eight airports in collaboration with ANA Aeroportos de Portugal.
ARI secured a seven-year concession to operate 9,500sq m of commercial space following a competitive bid process.
Further to a first round of openings, ARI targeted a series of renovations across its newly won Portugal retail estate.
“Portugal has been trading very well for us and ahead of where we thought it was going to be,” commented Kenny. “Passenger numbers have been very strong; people are still putting their discretionary spend in travel and spend has been very strong as well.
“We are in the midst of our capital refurbishment programmes across the eight locations starting [now] and over the next 12 months or so. We have great stores, but we’ll have really great stores when we finish that.”
Meanwhile, ARI this year celebrated 25 years in Canada with an event at the 1769 Distillery in Montreal. The company has concessions at Montreal, Quebec, Halifax and Winnipeg Airports.
“We’ve just opened a duty paid store with Chanel in Vancouver so it’s another flag on the ground for us in Canada,” revealed Kenny.
Over in Abu Dhabi, ARI has plenty to celebrate after finally being able to inaugurate its P&C, jewellery and sunglasses concessions at the new Terminal A at Abu Dhabi International Airport, which opened to the public on 1 November.
The ARI business is being handled by TRSS, an alliance between ARI Middle East (ARIME) and local partners.
ARI has had an operational readiness team in place since early 2023 in preparation for the opening, with colleagues involved from across the company’s business units.
“We’ve recruited pretty much all the colleagues we need in the business,” confirmed Kenny.
To read a more detailed interview with Anthony Kenny on ARI’s 2022 trading performance, access the TRBusiness Top 10 International Operators 2023 report by clicking here.