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EVENTS NEWS Last modified on March 7, 2013

The real deal

The conference season started early this year with The Trinity Forum held in Abu Dhabi at the end of January. Joe Bates reviews some of the highlights.

The Trinity Forum – where airports, retailers and brands get together to discuss the challenges and opportunities facing the industry – rarely disappoints, and this year’s event in Abu Dhabi was no exception.

 

Indeed, with a host of top drawer speakers, announcements, call for a new retail education programme and frustrations from some retailers that concession contracts are still too heavily weighted in favour of airport operators, it was almost compulsive viewing for the 300 delegates in attendance.

 

Hosted by Abu Dhabi Airports Company (ADAC) at the Yas Viceroy Hotel and International Media Centre next to the Yas Marina Circuit, the theme for this year’s event was ‘Thought Leadership in Travel Retail’.

 

In his opening address, ADAC’s chief commercial officer, Mohammed Al Bulooki, talked about the phenomenal growth of Abu Dhabi International Airport (AUH), which has experienced a 64% rise in passengers and a 90% rise in turnover since 2009 as it has grown from a gateway handling 9.7 million passengers annually to a mid-size hub accommodating 24mppa.

 

He also outlined his company’s development plans for the new 50 metre high Midfield Terminal Building (MTB) and reflected on the continued growth of the travel retail industry, predicting that ADAC’s concessions income will almost double to over $400 million by 2017 when the new terminal opens. 

 

Al Bulooki enthused: “The Midfield Terminal project is one of the largest aviation infrastructure projects in the world and will facilitate the growth of the capital of the UAE and its national carrier, Etihad Airways.

 

“This industry has proven long ago to be a strong growing business. In 2011, the worldwide duty free business reached $46 billion in revenue, and the anticipated growth rate for 2012 was 5% to 10%. With ADAC plans for the MTB being realised, hosting this Forum is a key step towards the delivery of a state of the art 700,000sqm terminal that will host the world’s best retail offer in 2017.”

 

Abu Dhabi Duty Free retail accounted for a record $220 million (+24%) of the industry’s global sales in 2012, its performance being boosted by AUH’s near 20% rise in passenger numbers.

 

Al Bulooki, who revealed that concession tenders for the new terminal are expected to be issued in Q1 2014, said Abu Dhabi’s strong performance was the result of an increase in both the passenger spend and average transaction value during 2012. 

 

ACI director general, Angela Gittens, reflected on the importance of non-aeronautical revenues to airports, revealing that they were now “a vital component in the economics of airports”.

 

“Development of commercial revenues has been highly dependent on two key factors,” said Gittens. “First, the evolution of the airport sector from a public utility to a commercialised, and in some cases privatised industry, has given airports greater freedom, expertise and motivation to exploit the commercial opportunities. 

 

“Secondly, is the pressure from the airline industry and growing government economic regulation for airports to contain prices for aeronautical services. The money to operate, maintain and develop the airport has to come from somewhere.”

 

She noted that non-aeronautical activity – largely driven by retail – now accounts for 43% or $46 billion of global airport revenues per annum, with African, Asia-Pacific and European airports earning around 40% of their non-aviation related income from shops and F&B outlets.

 

And, she made it clear that ACI opposes any regulation that stifles the flexibilty of airports to be commercially minded and responsive to their customers, arguing that this would, in turn, damage regional and even national economies.

 

“The diversification of revenues improves resiliency and financial viability of airports. This is why ACI is actively working to send the right message to ICAO and national regulators that regulation of non-aeronautical revenues goes against the best interests of the air transport industry,” stated Gittens.

 

Making his maiden industry speech at the conference, DFS Group’s chairman and CEO, Philippe Schaus, urged brand owners, retailers and airports to “aim higher than the High Street and the malls” in the quality of execution and service, noting the “commoditisation” of shop designs and customers. 

 

“Even we, as retailers, are becoming commoditised as we climb over one another to sell ourselves as the best operation while often under-serving the customer, when in fact there is no great differentiation between operators,” warned Schaus.

 

He added: “The industry needs leadership, refinement, multi-sensory experiences, creativity and more audacity. Let’s be obsessed by being different.” 

 

An example of the ‘Trinity’ at work was provided by Heathrow Airport, which in collaboration with retailer World Duty Free Group and three brand providers – Nestlè International Travel Retail, Diageo and P&G Prestige – planned, designed, built and opened a temporary Valentine’s Day store at the UK gateway.

 

Their collaboration – which resulted in the creation of the ‘Make it Special on Us’ store in Heathrow’s Terminal 5 – was the direct result of a challenge issued at last year’s Trinity Forum to see if it was possible for an airport, retailer and multi-brands to work together in such a way.

 

Roland Stieger (commercial director, Nestlè International Travel Retail); Peter Jacobson (commercial director global travel and Middle East, Diageo); Murat Akyildiz (director global distributor and travel retail, P&G Prestige); Muriel Zingraff-Shariff (retail concessions director, Heathrow Airport Limited); and Eugenio Andrades (chief commercial officer, World Duty Free Group) all admitted that working together on a project for the first time that gave joint exposure to each brand was not an easy task.

 

It involved over 200 emails and 40 hours of meetings and calls between the different stakeholders, 80 man-hours of training and 10 different briefs for creative output just to make it happen.

 

And the project came at quite a price for the participants – around €290,000, Heathrow stumping up €145,000 and the others around €40,000 each.

 

So what did they learn from the project they nicknamed ‘Trinity Plus’ and, would they do it again? Zingraff-Shariff said: “I think it is an experiment we could look to repeat if the circumstances were right.

 

“This double Trinity event has proven to be the catalyst to transforming Heathrow from being a host for retail activity to a initiator of commercial opportunities in our own right. 

 

“Through this initiative, we were able to use our physical terminal space, our in-house promotional teams and marketing resources as the platform for the creation of a brand new passenger experience.”

 

Diageo’s Jacobson added: “We are proud to have participated in and contributed to this first multi-faceted Trinity project. We have certainly learned some key lessons. 

 

“First, such an undertaking requires strong leadership with clear decision making authority. Secondly, it calls for a specific and measurable outcome grounded in a proposition that resonates for the traveller – and, which each of the partners can buy into from the start. 

 

“And finally, staying resolute to the possibility requires a commitment to the vision, patience, and strong relationships.

 

 

 

Other topics on the table during the two-day event included whether airports and their partners were doing enough to deliver a ‘sense of place’, and the importance of benchmarking airport commercial revenues and service quality.

 

ACI’s director of economics and programme development, Rafael Echevarne, told delegates that ACI’s annual Airport Service Quality (ASQ) survey shows that airports can boost retail/F&B revenues by getting the simple things right such as the cleanliness of toilets and ambience of terminal buildings.

 

He also revealed: “Most passengers have no intention of buying anything at an airport, but they don’t make a purchase because they cannot find what they want. 

 

“They are actually happier with the service they get in shops than the products in them. This is something that airports need to think about.”

 

He closed by reminding retailers and F&B providers not to forget the potential of small airports.

 

Other contributions included a rallying cry from OTG Management’s CEO, Rick Blatstein, for the industry to be “spectacular” and use interactive technology to innovate, while a lively and highly entertaining presentation from SimpliFlying’s CEO, Shashank Nigam, left airports in no doubt that they would miss out on revenue and passengers if they failed to embrace social media.

 

Also making a plea was Dag Rasmussen, president and CEO of Lagardère Services, who called for the establishment of a new educational platform where airports, retailers and suppliers could 

 

 be trained about how to operate in an industry where close co-operation and understanding between all three stakeholders is a necessity. 

 

In line with this, he told delegates that they had to keep the Trinity ideals top of mind and work with each other throughout the year and not just at the annual conference. He labelled the new mentality needed as ‘Trinity 365’.

 

Arguably aviation’s most prestigious global travel retail conference, the event is jointly organised by The Moodie Report and ACI World.

 

Reflecting on the tenth Trinity Forum, host and founder, Martin Moodie, admitted: “We have come an incredibly long way on this journey, but there is clearly a lot more to be done.”

 

In other news from the Trinity Forum, ADAC announced that it had signed a five-year contract with Duty Free Shoppers (DFS) to manage and operate Abu Dhabi Duty Free, until the end of 2017.

 

And, although not retail related, ACI announced that ADAC had become the latest airport to join its Airport Excellence (APEX) in Safety programme.

 

At a press conference held at The Trinity Forum, ACI director general, Angela Gittens, said: “We are delighted to have ADAC on board. The ultimate goal of the programme is to improve safety. This is done by collaborating with other industry partners in a peer review process to identify and resolve any vulnerabilities and sharing data and best practices.”

 

Earlier, Gittens had presented Airport Service Quality (ASQ) Assured awards to ADAC and Dammam’s King Fahd International Airport.

 

It certainly was an action packed Trinity Forum, and next year’s event promises to be even more exciting with the event hosting ACI’s ASQ Awards for the first time.

 

Where do we sign up?

 

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