Uncertainties cloud recovery path in long road ahead, say Americas leaders

By Luke Barras-hill |

The five-day virtual Summit of the Americas began today.

The duty free and travel retail industry faces ‘a confluence of uncertainties’ and must seize on the dynamic advantages it possesses to enrich the customer experience and stay competitive.

This was the topline message heard today (5 April) by delegates in the opening educational session on day one of the virtual Summit of the Americas (5-9 April).

Welcoming attendees, IAADFS Chairman René Riedi drew on statistical estimates from the United Nations World Tourism Organization (UNWTO) to illustrate that the economic impact on worldwide tourism as a result of the Covid-19 crisis amounts to around $910bn in revenue losses.

The sector’s knock-on effect to global GDP registers at approximately 1.5-2.8%.

“The crisis is not over yet,” Riedi warned. “Although many countries have started successfully vaccinating people, the industry is still facing a confluence of uncertainties. Without a doubt the Covid-19 crisis has had a profound impact on aviation, tourism and travel retail sector in the Americas.

“Faced by this scenario and the diminished recovery prospects for international travel in particular, IAADFS and ASUTIL collectively made the decision at an early stage that the only realistic platform for the 2021 summit was a virtual one.”

‘UNCHARTERED TERRITORY’

In the ‘View from the Top: The CEO Chair’ session, Corporación América Airports CEO and ACI World Chairman Martín Eurnekian cast doubt over comparisons between the scenario for travel and tourism today versus last year given the dramatic changes that have taken place.

“We are working with the information we have. Even places where today they have low access to vaccines, all the numbers I’ve seen show by 2021 the vaccine availability will be widespread and most countries will be able to move ahead with their vaccination campaigns, with different regions and times during the year. We hope this is the right path, but since this is unchartered territory we should think of a plan B.”

Eurnekian says the formulation of such a plan requires sharpened dialogue with governments to adapt to the aforementioned ‘new normality’, including implementing technology that facilitates the restart.

Offering a trading snapshot for Corporación América Airports, which boasts 52 airports in its portfolio across seven countries, he said: “We’ve had mixed results during the last year. It’s a long process that has had its ups and downs with some total lockdowns that were eased and came back into force again. It’s a very steep declining path for passengers everywhere with mixed results whenever restrictions are eased.”

He declined to provide specific indictors on pax declines, other than to say the fallout in 2020 year-on-year stood at around -70%, instead identifying two factors shaping the narrative since the beginning of the pandemic in March 2020.

Fear was the main driver affecting the drop in pax at the beginning, sending travellers into shellshock, he explained, However, over time that gave way as a ‘new normality’ set in.

“We no longer have this huge fear of travelling as everyone has come to terms with what is happening,” he said. “Fear is still there, but it has turned into something different: something that people feel is manageable.”

He observed that what is driving pax down is restrictions, which he said are frequently based on measures taken by governments to give populations clarity on the road ahead.

Asked by moderator Dermot Davitt of The Moodie Davitt Report about the shape of the recovery into 2021 and beyond, Eurnekian responded that it was a difficult question to answer.

Rathering than offering strong predictions, he pointed to global vaccine deployment programmes offering hopes for the recovery, coupled with a relaxation in travel restrictions. While the prevalence of factors that act to deter travel, there are other factors that will incentivise people to travel [the emergence of the IATA Travel Pass Initiative being one such device – Ed].

UNITING BEHIND A COMMON CAUSE

Speaking in his capacity as ACI World Chair, he acknowledged that the voice of airports during the crisis had been raised, but has not been heard loud enough.

The steps taken by governments, suggested Eurnekian, have not taken advantage of the available resources intended to make travel safe via a coherent system.

“International travel is one of the most standardised and well-coordinated industries in the world,” he maintained, as discussion turned to vaccinations, testing and the emergence of digital vaccination certifications to facilitate travel.

Corporación América Airports Chief Executive Officer and Chair of ACI World Martín Eurnekian.

Touching on travel retail, he said the industry has a real opportunity to shape its own future roadmap towards success.

“The travel retail industry and travel industry itself has long had ideas on what is the next step for the industry, how to engage with the consumer using tools that are available through technology,” he continued.

“As an industry because we lacked a bit behind the outside (world) one of the interesting things going on is [the pandemic] allows us to stop and think on how we want to shape the future, allowing us to have conversations with our suppliers to create new solutions, systems and ways to engage with consumers and be more efficient in the future.”

Fuelling this is greater synergies between different stakeholders – airports, airlines and duty free stakeholders – on data sharing that can make the consumer experience far better, Eurnekian suggested.

After discussing the mechanics of the ‘trinity’ and attracting commitments from the airlines – the well-versed missing part of the data jigsaw – Eurnekian emphasised the importance of sharpening the customer experience.

Asked about the future landscape of airports in the Americas, Eurnekian responded that it remains difficult to predict.

“The US has issued huge stimulus packages that have affected the airports and airlines; in Europe there have been measures supporting different countries and industries […] we will have to see how the industry behaves,” he noted.

He said most companies, including Corporación América Airports, have stopped moves to lift capacity at airports (via investments) but says the pause has allowed it to prepare for the restart, channeling the focus into the passenger experience and minimising disruption.

A series of informative and insightful exchanges on the state of Americas travel retail, passenger traffic challenges and opportunities, inventory and stock management and contractual agreements took place in the ‘Road to Recovery: The Retailer Perspective’ session. Clockwise from top left: Aurelio Barria, Motta Internacional; Dermot Davitt, The Moodie Davitt Report; Enrique Urioste, Dufry; and Alex Anson, 3Sixty Duty Free.

“It is more a matter of putting minds to work than investing a lot in capital expenditure,” he stated.

Addressing the dynamics of the commercial offer at airports, he acknowledged that a constantly evolving, more personalised experience is more important than ever, but delivering that is not without its challenges.

“I am still very optimistic about travel. I think our industry will keep being very relevant and still be an amazing place to showcase brands and engage consumers,” he concluded.

“Now is the time to unite behind a standardised way to reopen the industry […] and in the future thinking how we can compete in the virtual world with the advantage we have.”

The five-day virtual Summit of the Americas is hosted by IAADFS and ASUTIL in association with The Moodie Davitt Report.

Stay close to TRBusiness for more from day one of the virtual Summit of the Americas, including a panel discussion featuring 3Sixty Chief Operations Officer Alex Anson; Motta Internacional Senior Vice President Aurelio Barria; and Dufry General Manager Sub-Cluster South America Enrique Urioste.

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