INTERNATIONAL. Dubai Airports CEO Paul Griffiths has advocated an ambitious plan to see airlines play a central role within the airport retail sector. He made his comments during a well-received collaboration-focused Knowledge Hub session at the Moodie Davitt Virtual Expo yesterday.
“If airlines would participate in boosting travel retail revenues at key airports like DXB, we would respond by rebating the costs of doing business at the airport through a commission structure based on sales” – Dubai Airports CEO Paul Griffiths
Griffiths was speaking during a Martin Moodie-moderated discussion alongside Jean-Charles Decaux (Co-Chief Executive Officer, JCDecaux), Vincent Boinay (General Manager Travel Retail Worldwide, L’Oréal) and Dag Rasmussen (Chairman & Chief Executive Officer, Lagardère Travel Retail).
Griffiths laid down a new path that could substantially increase the size of the travel retail revenue pie for all four components of a ‘quaternity’ alliance between airports, retailers, brands and airlines.
He said: “I would be very, very happy to talk to our airline partners and say that travel retail, the airport and the airlines need to work together [to sell products]. There needs to be a mechanism for rewarding that shared space. And I think if airlines would participate in boosting travel retail revenues at key airports like DXB, we would respond by rebating the costs of doing business at the airport through a commission structure based on sales.”
Griffiths proposed that each airline would receive a rebate of its landing fees based on the amount that they were able to contribute towards the travel retail revenue generated. He added: “If we could make it work, we’d all benefit from the increasing volume. And we’ll all be prepared to share the upside of that with the people that make that possible [the airlines].”
He said that the COVID-19 crisis has brought into very sharp focus the potential threat from ecommerce but had also enhanced the opportunity, for travel retail. “Fulfilment gives us all a massive opportunity, because clearly fulfilment is far better handled on the ground. But the opportunities to see [view products, using wifi] exist mostly in the air. So the disconnection of those two things enabled through ecommerce could actually mean that we rethink the whole travel retail chain, from start to finish, and everyone has a different part to play.”
“Why not combine the almost limitless availability of products on the ground with opportunities to view them in the air and not limit the catalogue to anything that you can carry onboard?” – Dubai Airports CEO Paul Griffiths
Griffiths noted that very few airlines have integrated retail operations with partners on the ground, because they have “the obsession of carrying the stock with them in the air”. He said: “This is incredibly wasteful, and expensive. So why not combine the almost limitless availability of products on the ground with opportunities to view them in the air and not limit the catalogue to anything that you can carry onboard?”
He believes such an approach will bring “huge benefits, huge cost savings and huge efficiencies through the combination of logistics”. He added that the opportunities to see could only go one way and that is up. He said: “I think we have to get this conversation going quickly. And we have to get people talking a different language, to use the tools that are now available and very, very familiar to the consumer thanks to the crisis.
“If we want to follow the consumer from home and back again via their trip, we need to add up the different pieces of the puzzle and the airlines are a key part of that” – Lagardère Travel Retail Chairman & CEO Dag Rasmussen
“This crisis will actually reward those who can be flexible and innovate. Over the next few years what will be accelerated is that dinosaurs of our industry will quickly die out if they don’t see this as an opportunity to collaborate, to innovate and evolve a completely new business model.” – Dubai Airports CEO Paul Griffiths
“Because of COVID-19 airlines around the world will take many years to recover financially. So this could be the exact moment to put together a consortium of airports, airlines, travel retailers, advertisers [i.e. brands] into some form of think tank to say ‘how can we use this opportunity?’. I think there’s a huge amount of revenue and profit and efficiency to be gained by furthering this.”
Griffiths’ co-panellists were united in their support for the suggestion, all stressing the importance of involving the airlines more. Boinay said: “If we want to really have a rebirth in this industry, then we need to change the equation and to play a different game together and play it well. We need solutions that are going to be sustainable for the brands, sustainable for the airport and sustainable for all the stakeholders, including the airlines and the retailers.”
Rasmussen said: “If we want to follow the consumer from home and back again via their trip, we need to add up the different pieces of the puzzle and the airlines are a key part of that. None of us have them individually. So it’s just a must, if we want to be consumer-centric, we need to work together.”
Decaux said: “We are ready to start the discussion as soon as you need and as soon as you want, because I think this can take our industry to the next level for the next 10-15 years. I don’t think this is something we can put on one side at the moment because it’s the right time to try to create this. This new sharing platform must include the airlines.”
Griffiths ended the session with an urgent rallying call to sector stakeholders. “This crisis will actually reward those who can be flexible and innovate and I think over the next few years what will be accelerated is that dinosaurs of our industry will quickly die out if they don’t see this as an opportunity to collaborate, to innovate and evolve a completely new business model.
“We’re here, we’re open for business, we’re open to change, we’re open to innovation. A great deal of flexibility is required to create a new industry around the current components of travel retail and I think it will be very successful if we move quickly and get it right.”