Marcus Spahn, Matarat Holding General Manager Commercial (Non-Aero) on stage at MEADFA Conference 2024.

Four leading industry voices gathered together at the MEADFA Conference 2024 in Abu Dhabi to discuss the importance of non-aeronautical revenues for airports across the Middle East and Africa, as well as growth opportunities linked to the Indian subcontinent.

In the session titled ‘Fuelling for growth’, the level of transformation and rapid pace of development in Saudi Arabia was a key focus topic, with Marcus Spahn, Matarat Holding General Manager Commercial (Non-Aero), offering an update on what’s coming down the tracks in the kingdom.

“We are in an ongoing phase of transformation,” confirmed Spahn. “We are taking around 50,000 sqm of commercial areas into operation over a two-year period of 2024-2025, with some of those already in operation now and other to follow until the end of 2025.

“We have a fantastic new terminal in Jeddah, and we are currently refurbishing at Riyadh.”

The beauty of new developments, said Spahn, is the ability to put retail at the heart of the action.

“We try to implement the Saudi heritage into the terminal and a sense of place,” he said. “We have a fantastic terminal coming up in Abha where and we have taken [inspiration from] the design of the local buildings and put that into the design and structure.”

Working with local partners and vendors plays a key role in bringing to life a local touch.

“We are aiming to bring more local products and local operators into the market at the airport, in combination with international operators. We are encouraging our concessionaires very much, mainly in F&B but also on the retail side, to work with local partners.

“We have a fantastic concept coming up in Jeddah, for example, where one of the operators is teaming up with a local chef and it is going to be the first chef-led local concept at an airport in Saudi Arabia.”

Looking at how the contribution of non-aeronautical revenue is tracking, Spahn said: “We are looking at growing it a lot – we have a goal of 45% across all the airports.

“The global aviation market will double by 2040 but in Saudi we are tripling it by 2030,” he added.

As part of the Saudi government’s Vision 2030, the goal is to increase the number of passengers travelling through Saudi airports to 330 million annually.

Saudi’s share of domestic passengers is approximately 50% and, with the growth of tourism expected in the coming years, Spahn expects this to reduce slightly yet still remain a vital part of the customer base.

In terms of headwinds, Spahn sees two main things: Delivery of the country’s infrastructure, including the on-time delivery of the capacity that Matarat needs to accommodate the passengers KSA is hoping for.

“But it’s a challenge not a headwind,” he clarified.

Next is convincing people of the potential of the Saudi market.

“A sleeping giant is exactly what it is,” he said. “I have been here since 2008 so have seen the changes in the very first days and in the past 3-4 years. It’s incredible.”

Chichi Maponya, Co-founder and Executive Chairperson of Africa Travel Retail discussed how Africa is poised for growth.

Next, Chichi Maponya, Co-founder and Executive Chairperson of Africa Travel Retail took the mic to weigh in on the conversation on dynamics in Africa.

She explained how on the continent, pax traffic will reach approximately 240 million per annum.

“This is a continent with the youngest population that represents 18.5% of the global population. But [the share of those who] travel is only a small component of that. So that tells you there is opportunity for growth and development and also for the numbers to grow.

“It’s anticipated the numbers will double in 10 years and that will require the numbers to grow at 10% per annum.”

Key to this is having solid infrastructure.

“Many of the African countries have legacy buildings that were designed for a smaller number of passengers so there are constraints in terms of how much can be done. But a lot of them are making improvements in terms of their facilities and revamping the terminals in anticipation of wanting to grow the pie and the passengers.”

She referenced developments in Nigeria, Algeria, Ethiopia, Namibia, Cape Town and Johannesburg as among those improving their terminals to attract new airlines  a welcome move considering connectivity within the continent could be stronger.

“Often to travel in the region you have to travel outside of the country and then come back into the region, but the Open Skies initiative is there to try and facilitate more connectivity within the continent. We need to get beyond the talk and start seeing the implementation of it – only then will we start seeing the numbers.”

On the issue of the visas, Maponya highlighted how, out of the continent’s 54 countries, only four can be travelled to without a visa from within Africa, while another 20-30 offer a visa on arrival.

“But if we are talking about connectivity, these are some of the things we need to very quickly implement to improve the passenger traffic and connectivity on the continent,” she said.

Maponya spoke of the issue of securing capital to fund airport improvement projects – much of which are government owned – although there are those who are open to co-investing with the private sector or who are looking at PPPs. Plus, she highlighted how investment in tourism and tourism infrastructure is vital in creating much-needed jobs.

“Having a [significant] youth population is in itself a huge opportunity,” she said. “These are people who want to travel for experiences and to engage with facilities. They come to Abu Dhabi, Saudi, Dubai and they know the experiences there and they have an expectation of seeing the same kind of facilities and experiences in countries in Africa. I must say we are seeing a lot of the countries wanting to create those experiences in the redesign of the facilities.”

Maponya also pointed out how there is a real estate lying fallow, which could have potential to be utilised.

“Africa has the lowest contributor of non-aeronautical revenues – around 30% – whereas in many other markets it is around 40-50% so we are still lagging behind with reaching those numbers,” she said.

“The bigger operators are bringing freshness and what travellers see internationally into the local market. But coupled with that, it’s now finding the balance with the local content, experiences, brands and products. That is a discussion that is very much on the table and it’s encouraging to see that many of the operators are open to that discussion.”

She described how retailers need to understand and cater to the distinctive passenger profiles with good quality items and services that capture the memories and experiences of the destinations visited to share with friends and family.

“Africa is poised for growth,” she summarised. “That’s where the opportunities are and it’s exciting to watch the growth and speedy development with limited resources.”

Ashish Chopra, CEO of Delhi Duty Free weighed in on the conversation.

Ashish Chopra, CEO of Delhi Duty Free, added his perspective to the discussion on growth opportunities linked to the Indian subcontinent.

He gave an insight into the challenges of airport shops moving from being an element ‘on the side’ to becoming part of a collaborative retail journey with airports in terms of planning retail infrastructure.

“Shopping is an essential part of the journey, but you have to evolve as an airport and a retailer,” he said. “In terms of the size of the Indian aviation space, there are around 80 million passengers, and international is about 22m of that. Next year it’s expected there will be around 24-25m international.

“India has one of the youngest populations in the world – a third is under 35. This presents a good opportunity.”

He highlighted how a lot has changed in the past 5-7 years and the next 5-10 years are set to be “very interesting”.

He also offered an insight into the evolution of the Indian consumer.

“Dubai and Singapore used to be the most important destinations,” he said. “The sense of retail was unparalleled in our country. I think we are learning well. Have we learnt enough? No. We are still on that journey.”

Key to keeping pace is adaptability.

“There were times when perfumes and cosmetics used to be about 10-12% of our category mix,” he said. “When we did the major refurb of the shops it went to about 16% and now it is trending upwards of 20%.

“With liquor, about 13-14 years back, it was about blended whisky and standards. Now, one of the biggest selling categories is the malt category.

“Also what is also noticeable is how the India brands have an eye on the stage. People come and ask for homegrown Indian brands in the shop.

“Consumers are evolving every day. It’s all about optimisation of the space you work in. I wish we had more space.”

He touched on the major challenge of price competitiveness compared to the domestic market, especially with liquor pricing being in the spotlight in India.

“I could speak on that for the whole day,” he said, later adding: “We have to offer travel retail exclusives and all that, but if someone wants bread you have to give them bread and not cake.”

Ultimately, he underscored how an important factor to success in the Indian subcontinent is to embrace that Indian travellers and shoppers are extremely service oriented.

“We like to be serviced and sometimes over-serviced in terms of the brand ambassadors in the shop,” he said.

“We need to be striking a chord with them before, during and also post journey.”

Chopra explained how feedback on the product offering including anything that was missed, is vital in understanding and improving customer satisfaction and this is something Delhi Duty Free will be focusing on in the coming years.

Abdeslam Agzoul, CEO Middle East and Africa of Avolta takes the mic.

The final part of the session, Abdeslam Agzoul, CEO Middle East and Africa of Avolta AG, took the mic to discuss sense of place as a lever for driving spend.

He described how Avolta’s customer centricity approach and the importance of striking a balance between having an international and local offering.

“India is one of the best and most important customers we have – not only in Abu Dhabi but in Sharjah and we are also putting a special focus on these customers in retail and F&B – Taste of India is one example.”

He described how pricing is one factor, but focusing on putting customers at the heart and delivering impactful experiences are equally important.

“Understanding your customer is very important, and you can get that from data capture and analysis,” he said. “This has been our main focus over the past year, to better understand our customers – especially our Indian customers in this case – trying to see how we can serve them better and propose to them the right products and services, at the right moments.

“That is how we are battling against price challenges. The customer focus through data and the loyalty programme, Club Avolta, has helped us in engaging our customer and to keep them loyal and spending and to make them happier.”

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