Dufry Mexico has reported increased DF&TR sales this month (July 2020) as the business continues its recovery from the coronavirus (Covid-19).

Speaking as part of the latest ASUTIL webinar, Álvaro Neto, Director General, Dufry Mexico said business at Cancun Airport in particular was slow in June. This was because only business travellers passing through the airport. Normally, Cancun Airport attracts high numbers of tourists (mainly US travellers) as the City of Cancun is a holiday destination.

One terminal at Cancun Airport re-opened on 8 June 2020, before Terminal 4 re-opened on 15 July 2020. Most other Mexican airports resumed operations between 1 July and 3 July 2020.

Overall Dufry DF&TR business across the country began to disappear in March as stores closed due to sanitary issues.

Neto said: “The re-opening of Cancun Airport was important for Dufry, not only in terms of generating revenue, but as a laboratory to harmonise Dufry sanitary procedures with those methods outlined by the International Civil Aviation Organisation and the Ministry of Health.”

THE ‘UNIQUENESS’ OF MEXICO

Outlining the ‘uniqueness’ of Mexico, which was the only Latin American country where airports did not close, Neto commented: “There was no continuity in terms of flights, as only domestic flights were open.

“In Mexico, the US is the origin and destination of 75% of flights. This is what sustained the business.”

On Cancun Airport in particular, he added: “In July, sales reached 25% of 2019 levels because more hotels were re-opening and US travellers were joined by those from Canada and Europe.

“We are waiting for more arrivals from South America, but this is not happening at the moment.”

Liquor and tobacco continue to lead the way in terms of product categories post Covid-19. “Liquor and tobacco continue to dominate, driven by promotions, which help decrease surplus stock.”

Over in Mexico City, where Dufry signed a new contract with Aeropuerto Internacional de la Ciudad de México to run three new duty free stores at Benito Juárez International Airport last year, trends relating passenger movements and sales figures are similar to Cancun. “They are showing the same speed of recovery in Mexico City because there are more business travellers.

“Alcohol sales have dropped, but liquor remains second in the sales charts.”

He concluded: “In general, duty paid is performing better than duty free. The category mix is basically the same with a strong emphasis on promotions.”

Meanwhile, Rafael Echevarne, Director General, ACI Latin America and Caribbean has reported a 51% traffic drop to the end of June 2020.

Echevarne, who emphasised that the traffic situation differs between countries said: “There is Mexico, which we believe is the only country in the world not to impose any restrictions on air transportation. We then have countries, mainly in the southern part of the continent, including Colombia and Argentina where the lockdown has been very strict.”

Elsewhere, Uruguay is the only country South American country the EU has opened its borders to. There is also Ecuador, which resumed air transportation after a complete lockdown.

MORE ACTIVITY IN BRAZIL AND MEXICO

Regarding countries such as Brazil and Mexico, Echevarne remarked: “In these countries, the situation is different to the rest of the region as there is a lot of domestic traffic. This means there is more activity than other countries.

“In Mexico we are no longer talking about a 90% drop in traffic. The figure is now around 70% because there is a lot of domestic traffic.

“The situation is similar in Brazil, although the volume of activity for domestic flights is not as high as Mexico.”

Comparing the protective measures implemented at European Airports to those in place across Latin American hubs, Echavarne, who was travelling in Europe at the time of the webinar said: “Latin American Airports have implemented all measures and protocols to ensure air transportation is not a vector of transmission of Covid-19.

“Measures include ensuring only travellers enter terminals and that all passengers and employees wear masks.

“All airports have improved cleaning protocols and I can say that protocols in Latin America are much stricter than in Europe.”

A detailed presentation from Bernabel Trading Director Martin Laffitte, whose company runs duty and travel retail on board Buquebus ferries, running from Buenos Aires in Argentina to Montevideo and Colonia in Uruguay, outlined key safety measures introduced on board.

According to updated protocols, passengers travelling to Uruguay must test negative for Covid-19 before boarding. They must remain in the country for seven days before taking another test, after which they can move around. Testing facilities are available on board.

Trips from Montevideo to Buenos Aires and Buenos Aires to Argentina resumed on 19 June 2020. Duty free stores also began trading with a variety of payment methods accepted.

Around 50-70 people are permitted to enter stores at any one time and entrances and exits are separate, so there are not too many people in the same area.

Shoppers must remain 1 or 1.5 metres apart and shopping baskets are disinfected once customers leave stores.

Sanitiser dispensers are available in shops and customers must rub the gel on their hands before touching or testing merchandise.

Once ferries dock on arrival, staff must follow a special cleaning procedure. Crew must also declare any Covid-19 symptoms.

Impulse purchases are being driven by small trolleys so people can purchase duty free products in different areas of the ferries. Bernabel is also optimising its online shopping website to communicate with passengers before and during trips.

Lafitte said: “Travellers are Uruguayan or have residence in Uruguay. They are buying stock for their home, which is why alcohol sales have risen +43%. In Uruguay, you cannot go to a bar or restaurant, so the only option is to drink at home.

“78% of passengers go to the duty free store and everyone buys something. Perfumes and cosmetics sales are up +1.25%, but fashion is down -52%. Chocolate sales have dropped 8%, although it remains one of the leading categories.

“People have so many examinations before boarding, they believe they are in a healthy sanitary area when shopping duty free,” he emphasised.

REVISED FORECAST

Gonzalo Yelpo, Latin American and Caribbean Air Transport Association (ALTA), Legal Director and General Counsel presented further statistics. Before the pandemic, the company predicted a 5% growth in monthly traffic across the region. “Our forecast changed dramatically. We were expecting traffic to hit 50% of 2019 levels, but it is unclear if we will reach that now.”

According to Yelpo, traffic ‘dramatically dropped’ more than 95% in April and May. This means traffic for the first half of 2020 decreased 50%.

“In April and May, between one million and two million were travelling. This number takes us down to the 1960s when we had one million passengers flying in a single month.

“This April, we registered 1.1 million passengers versus 35.3 million in the same month last year.”

Yelpo, who admitted the aviation industry is in a ‘totally uncertain period’, does not believe the industry is contributing to the spread of Covid-19. “We understand the government is facing a lot of pressure from the public, so opening the borders and allowing people to fly is considered a threat.”

He added: “We are predicting revenue losses of $18bn for Latin American and Caribbean carriers in 2020 due to Covid-19.

“In regions such as the US and Europe, airlines and receiving state aid in the form of direct loans or loans granted by states. Some carriers are even receiving bail outs.”

Citing a recovery forecast made around two months ago, Yelpo indicated he does not expect passenger numbers in the region to reach 2019 levels until 2025.

“Europe and China are beginning to show signs of recovery. They have strong domestic markets,” Yelpo emphasised.

“In our region, people are not looking to travel. This is the problem. They are not confident enough to travel as they are scared of measures such as quarantine on arrival which have implemented by governments.”

A harmonised approach among all countries (the implementation of similar protective measures), will spearhead the recovery. “Having a patchwork of decisions in countries, especially in regions such as Latin America and Caribbean, which is geographically spread, is something governments must address. This will ensure the re-start of operations.”

José Luis Donagaray, Secretary General, ASUTIL tried to remain optimistic. “There is no final solution as nobody knows when this is going to end. There must be dialogue between suppliers and operators and between retailers and airport authorities/airport owners.”