SINGAPORE. In what shapes as game-changing news for the inflight retail sector, DFASS, SATS and Singapore Airlines (SIA) have agreed to establish a joint venture to engage in omni-channel travel-related retail operations in Singapore. The partnership will begin with SIA’s KrisShop programme and Scootalogue, the retail business of SIA’s low-cost subsidiary Scoot.

Under a Points of agreement, SIA intends to acquire 70% of DFASS-SATS Pte Ltd, which currently is equally owned by DFASS (Singapore) and SATS subsidiary Asia Pacific Star Private Limited (APS).

DFASS (Singapore) and APS will each retain 15% under the terms of the agreement. DFASS-SATS  currently operates the KrisShop business for SIA and its regional arm SilkAir, as well as Scoot’s Scootalogue programme – all under concession arrangements.

“This is a win-win-win partnership among three great companies which we expect will help us substantially grow our travel-related retail business” – Singapore Airlines CEO Goh Choon Phong

Does this deal signal take-off for a wider inflight shopping marketplace?

Additionally, DFASS will be the exclusive supplier to the joint venture while SATS will be in charge of onboard fulfilment. The joint venture will enter into a management contract with DFASS and SATS to leverage the expertise of the two companies in their specific fields and will operate as a separate omni-channel business unit with dedicated staff.

The technological platform will be developed in conjunction with DFASS’s exclusive partner, Wiesbaden, Germany-based AOE, described as the aviation world’s leading non-aeronautical revenues digitalisation company.

“We are very much looking forward to transforming the current model into a modern, powerful and consumer-oriented omni-channel experience”  – DFASS Executive Vice Chairman Roberto Graziani 

DFASS Executive Vice Chairman Roberto Graziani: “DFASS is really excited to start this new initiative that, we are convinced, will positively disrupt the travel retail business”

The joint venture will offer travellers inflight duty free and duty paid goods and pre-order services through both onboard and ground-based delivery. Initially these services will apply to the existing KrisShop and Scootalogue inflight sales brands, but the aim is to expand the scope to other potential interested parties, according to a joint announcement.

“This new venture brings our longstanding partnership into the digital age. Passengers will benefit from relevant, exclusive shopping opportunities, customised to them personally, and integrated seamlessly into their overall customer experience.” – SATS President and CEO Alex Hungate

DFASS Executive Vice Chairman Roberto Graziani said, “Being a company which has been setting the pace in the inflight retail business for the last 25 years, we are very much looking forward to transforming the current model into a modern, powerful and consumer-oriented omni-channel experience.

“DFASS is really excited to start this new initiative that, we are convinced, will positively disrupt the travel retail business, together with partners that place customer experience at the heart of their strategy and with which we have built a successful long-term relationship.”

SIA CEO Goh Choon Phong said: “The joint venture will bring together strengths of all three partners – the SIA Group’s customer base of more than 30 million travellers per year and our growing KrisFlyer frequent-flyer programme, as well as SATS’ airport and logistics expertise across Asia and DFASS’ extensive supplier network and retail experience” [Photo: IATA]

SIA CEO Goh Choon Phong said: “This is a win-win-win partnership among three great companies which we expect will help us substantially grow our travel-related retail business.

“The joint venture will bring together strengths of all three partners – the SIA Group’s customer base of more than 30 million travellers per year and our growing KrisFlyer frequent-flyer programme, as well as SATS’ airport and logistics expertise across Asia and DFASS’ extensive supplier network and retail experience.”

SATS President and CEO Alex Hungate said: “This new venture brings our longstanding partnership into the digital age. Passengers will benefit from relevant, exclusive shopping opportunities, customised to them personally, and integrated seamlessly into their overall customer experience.”

Subject to the successful completion of due diligence, various conditions being met and necessary approvals being obtained, the share sale agreement, the joint venture agreement and other definitive agreements are expected to be firmed up in the third quarter of 2018.

Looking beyond the inflight trolley to a world of possibilities (Image: SIA)

Martin Moodie comments: Could this be a watershed moment for an inflight retail sector that has been moribund in recent years due to the limitations of a legacy model based around the ubiquitous shopping trolley and onboard brochure? In contrast, this alliance offers a bold, digital reinvention of that model. It marries a vast and attractive consumer base with a shopping proposition no longer constrained by space and offering both onboard and (more excitingly) at-home fulfilment.

The combination of one of the world’s great airlines (with unrivalled knowledge of its consumers) and the biggest inflight retailer (Bernard Klepach’s DFASS, recast here not as a concessionaire but as a joint venture partner) together with the fulfilment expertise of SATS and the technological skill and vision of AOE, potentially augurs a new kind of travel shopping marketplace. Fasten your safety belts, inflight retail may be ready for take-off.

We’ll bring you more comment in coming hours.