Airport traps are gold mines for owners

© michael spring – 123RF.com

Shopping has become an increasingly relevant component of the air-tourism value chain, as consumers - who essentially are grounded (if only for a golden hour) - amble about.

The story is in the figures. Travellers at OR Tambo's international airside duty-free mall rang up sales to the tune of just over R2bn between April 2014 and March last year.

Now, as part of its diversification, Airports Company SA (Acsa), which owns OR Tambo International and eight other airports in SA, has put more fire-power into travel retail - what Pernod Ricard, owner of Absolut vodka and Chivas Regal whisky, dubbed the "sixth continent".

About 37% of Acsa's revenues come from nonaeronautical services such as car parking, real estate and retail, a figure that the parastatal is looking to increase in a bid to lessen its dependence on tariffs, which are highly contested, with little agreement between the regulator and Acsa on the appropriate levels.

Being less reliant on tariff revenue will allow the company to exercise more control over its bottom line.

Along with skills exchange agreements with international airports such as Germany's Munich Airport and doubling its expansion, maintenance and operation stake in Brazil's busiest airport, Guarulhos International, Acsa is refurbishing OR Tambo's duty-free mall and is due to launch an online shopping website.

A new service allows passengers to prepurchase core duty-free products when they depart and to collect their goods on their arrival back in the country.

In the meantime, both impulse shoppers and high-spending travellers who plan and know what they want account for purchases at the airport, says Acsa's head of marketing, Shethal Badal.

Chocolate and biscuits are "winners all the time", as is booze. "With spirits, the duty is not there, the quantity is bigger and there are certain lines that are travel retail-exclusive and available only at airports," Badal says.

Travellers from Asia and oil-rich African countries are big spenders, even at airports.

"The Asian shoppers buy a lot of aloe products and they like luxury items like tanzanite. Spend per passenger is high on luxury goods, as China has high duties on name brands and that's why they tend to do their shopping when they travel," Badal says.

"We have a Mandarin-speaking staff member and translate campaigns into Mandarin."

Like airports around the world, food and beverage outlets, as well as speciality retail stores - which include luxury or mainstream brands - have to enter a tendering process to secure presence at an airport.

Apart from rand depreciation, the growth of international retail spend per passenger is influenced by marketing and promotional plans.

"Airports tend to be quite sterile environments, so we launched a promotion that includes marimba music, Zulu dancers and experiential tastings on products like Amarula," Badal says.

Absa Investments analyst Chris Gilmour says traffic and other delays make it essential for passengers to travel to the airport earlier in order not to miss a flight. This, in turn, means more time in the concourse beyond security.

But he does not buy into the airport shopping experience, Gilmour says.

"The whole bit about duty-free and tax-free is a con at airports around the world," Gilmour says. "Prices at airports are pretty much the same as they are in the high street and yet it doesn't deter people from buying.

"It's about impulse buys - people buy because they are bored in much the same way as they eat repellent airline food, just to pass the time," he says.

Retail trade at OR Tambo has not been left unscathed by the recent changes to SA's visa regulations which include the requirement that all minors travelling in or out of SA have to have an unabridged birth certificate.

"It impacted us hugely ... sales (for the calendar year) came in far lower than the previous year," Badal says.