COMMENT Airside versus landside debate outdated
Now and Then... T
wenty years ago this issue, governments
were being urged one final time to delay the abolition of intra-EU duty free. However, it
was a piece in the November edition that grabbed my attention. Post-abolition, this publication mused how airports might shift more investment into what we described then as ‘second fiddle’ landside retail zones to claw back some of the fiscal losses airside. One view was any growth in landside
retail designed to help offset the associated financial damage caused by the demise of intra-EU duty free should be considered a threat to duty free retailers. In September that year at a TFWA EU Duty Free Forum, Gebr. Heinemann Managing Director Harry Diehl argued airports would not develop the landside business at the expense of airside retail as the mathematics simply did not add up. While agreeing with the point in theory, Frank Gray, Managing Director at Concession Planning International said the argument would not hold much weight if airports took the decision to invest in landside regardless. Gray said the mix will be different in many cases and similiar in others. Yet, the key decisions regarding space in airports isn’t made by the retailers – they’re made by the airport and the airport decides what the rules are, he said. Today, the duty free and travel retail mix is
more sophisticated than ever as the industry responds to rising global passenger traffic. It is true that the so-called ‘golden goose’ of airside duty free feeds substantially into the trade’s estimated $70bn-plus duty free and tax free turnover funnel, with ‘core categories’ such as wines & spirits and tobacco estimated to contribute at least $17bn, together with more than $26bn from tax free perfumes & cosmetics. However, a huge variety of other products such as fashion, watches and electronics are also sold in landside, tax paid environments. These continue to improve drastically in Europe and further afield, one notable example being Schiphol Airport Plaza. Brexit of course offers sizeable potential
to realise increased revenues and economic benefits at airside through a potential
70 TRBUSINESS
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Landside retail growth was a more acute issue in the wake of intra-EU DF abolition.
return of UK-Europe duty free allowances, although the fog of the current ‘deal or no’ scenario remains thick. The current withdrawal deal is virtually extinct, Prime Minister Theresa May has stepped down and a leadership challenge has begun as the UK edges precariously towards the 31 October deadline. Should duty free allowances eventually
restore between the UK and Europe, it will undoubtedly provide a lucrative economic injection (the Irish Duty Free Alliance has already suggested it could deliver an additional $53m in sales to its domestic economy, stimulate regional gains and create 450 jobs in a broadly neutral Exchequer impact). Notwithstanding this, the fact remains that airports in Europe and elsewhere have invested a great deal more space in landside zones in recent years, with further investment expected. Technology is the main protagonist for
change and the first commercial touchpoints (landside) are perhaps becoming the most important. Moreover, the language of duty free and travel retail is becoming more ingrained in the planning fabric of airports. With the onus now more than ever on bumping up commercial spending across the entire travel journey, the landside versus airside discussion – at least anecdotally – seems to have run its course. «
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JUNE 2019
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