BORDER SHOPS
other side of Brazil,” he said. “The other thing not helping is
the internal costs of Serpro. [Border shops] are reopening and things are moving now, we are having meetings every week.” At the time Donagaray shared the
comments in August, he expected around 12 stores to be open, including at Foz do Iguaçu, in the coming month(s) although virus hotspot areas such as Rio Grande do Sul, São Paulo and Porte Alegre have been tougher to contain and enforce quarantine rules due to population congestion challenges. “We have been working with the
Board of ASUTIL and the authorities in each country to get concessions and fixing minimum annual guarantees,” he said. “Once vaccines arrive to Latin
America, particularly Brazil, people with money will pay privately to have it to start flying and travelling.” The borders duty free business
is certainly not being helped by the situation at the region’s airports, with most across South America remaining closed for international traffic with the exception of Brazil, Uruguay, Ecuador and Argentina.
Buy before you fly ASUTIL expects that in the coming month, other airports in LatAm will reopen as airlines recommence international flights to countries including Colombia, Peru and Chile, though some airlines are not restarting due to the dearth in passengers. The inherent uncertainty of
Covid-19 poses problems; on the one hand ASUTIL is pushing in its negotiations for fixed MAGs based on achieving a specific number of passengers. “But this is very difficult as
airports need the money,” contends Donagaray. “We are working hard on this issue, with Dufry in Uruguay on pre-sales so you can buy before you get to the airport, reserve and collect, order online for delivery. “We are working with the
government; we have some solutions in Chile and Argentina, but it is not easy. Each country has a different Covid situation.” ASUTIL maintains that its
OCTOBER 2020
Estimated airport industry losses for 2020 Revenue losses (billions USD)
Total airport industry losses amount to 104 billion USD in 2020 (Largest losses in Q2 2020)
28.6 Q1
4.4 Q2
Projected revenues
14.3 Q3
20.9 Q4 Estimated loss
Huge proportion of non-aeronautical revenues is directly passenger-related (>70%)
Chinese traveler – higher spending propensity especially in the travel retail space (unrealized expenditures)
104 USD 68 USD
Typical hub generates 1.3 billion USD – Equivalent to 80 hubs getting revenues completely wiped out
60% decline Source: ACI
next steps seek to standardise across the region the same protocols in each country. Switching to North America,
Canada’s usually flourishing duty free border trade has been hit due to the closure of the US border to all but essential workers. During the DFWC webinar, the Frontier Duty Free Association (FDFA) updated that the US-Canada border closure has been extended until at least 21 October. As a result, more than 50% of land
border shops remain shuttered and those open to essential workers are experiencing low traffic. Aside pushing strongly for rent
relief like other associations, the FDFA has developed a duty free economic package highlighting a range of immediate and long-term measures to support land border duty free stores throughout the pandemic and beyond. These include a proposal for a duty
free interest-free loan programme, extensions to wage subsidy and rent relief programmes, the creation of a Canadian duty free zone, a general reduction in red tape and return of the much-publicised ‘Visitor Rebate Program’. During the DFWC webinar, Patrick
Lucas, Director of Economics at ACI World identified important supply and demand mechanics influencing the route to recovery for the aviation industry, which indirectly supports non-airport retail segments such as border shops, cruises and diplomatic stores. In a welcome sign of progress, Lucas elucidated that 115 global
travel destinations have eased travel restrictions introduced in response to the Covid-19 pandemic. On the other hand, 93 destinations continue to have their borders completely closed to tourism. While damage to passenger traffic
volumes have softened moderately since the second quarter of this year (-89.6%), ACI World is still forecasting a 59.6% decline in total passenger traffic in 2020 and international volumes are not expected to recover until 2024 at the earliest. Airports are tipped for a $104bn
revenue loss this year, forecasts ACI World. That picture has been made decidedly murkier of late with suggestions that the virus’s spread is now moving into a ‘second wave’. Based on modelling, ACI World
views the recovery in pax as being contingent on the removal of quarantine measures and travel restrictions, the timings of a universal vaccine and effective supply chains for deployment, and the influence of economic conditions such as income levels, prices and customer behaviours. «
“We are working with the government; we have some solutions in Chile and Argentina, but it is not easy. Each country [in LatAm] has a different Covid situation.”
José Luis Donagaray, Secretary General, ASUTIL
TRBUSINESS 43
Above: ACI World estimates total airport industry losses of $104bn in 2020.
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