The Latin America Report News and views on the airport, airline and travel retail sectors in the region www.thelatinamericareport.com
ASUTIL ISSUE
June 2015
Tocumen Transforms •Airport expansion plans provides capacity for 33 million annually •Europe and Asian duty free operators expressing interest •C once ssion tend ers set for early 2016 See Page 6
Airports
Quito airport continues expansion The second phase of the expansion of Quito’s Mariscal Sucre Airport passenger terminal was opened to the public on May 18. The U.S. $22 million expansion is comprised of 7,910 metres and offers new boarding bridges and 10 new gates. Andrew O'Brian, President and CEO of airport operator Corporación Quiport said, “It is an honour to deliver this new work to the city of Quito, in order not only to improve passenger comfort but also, using their own techniques and materials, local architecture, and a sense of identity and belonging to Quito airport." Indoor/Outdoor gardens The inclusion of indoor and outdoor gardens, hanging plants and ponds make this area a place that allows passengers feel in touch with nature. The new waiting areas offer three food and beverage establishments and the incorporation of a local menu, new retail stores with a focus on local goods, a new National VIP room and a children's entertainment space.
Ecuador Travel Stores, located in the airport’s busiest corridor, is a shopping promenade featuring a variety of goods.
The design, construction and project management for the expansion of the terminal was carried out by Ecuadorian talent. About 450 local workers and 70 companies (68 of which were Ecuadorian) were utilised. Boulevard Rialto is the name for the 70-metre long hallway leading to the new waiting areas. Ceramic coating representing various parts of Ecuador was used on the walls. - Page 2 -
Located in the busiest space in the airport, Boulevard Rialto features Ecuador Travel Stores, a shopping promenade offering a variety of goods from books to snacks to clothing. Last year, Quito’s international airport handled approximately six million passengers, a new record for the airport. This represents a 9.1% increase in traffic over the previous years.
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Airlines
Surge in new Florida – Latam routes Numerous airlines are expanding or beginning new routes connecting Florida with Latin America. Delta Air Lines plans to launch a route between Orlando and São Paulo starting in December. The airline has filed for regulatory approval to operate the route four times a week. Brazilian carrier TAM will begin a Brasilia – Orlando route in July. Azul Brazilian Airlines announced it will begin an Orlando – Belo Horizonte route beginning in November. The new service will operate five days a week and then daily from Dec. 14. Azul will also
increase its São Paulo – Orlando route to 10 round trips a week beginning in mid July. Low-cost carrier JetBlue Airways will begin daily flight service from Fort Lauderdale-Hollywood International Airport and Orlando International Airport to Mexico City’s Benito Juarez International Airport beginning in October. JetBlue also plans to begin a route between Orlando and Quito, Ecuador early next year. "Demand
Brazil airport concessions expected soon New concession tenders for Brazil airports might be released this month, according to Brazil media. Reports suggest four airports might be put up for privatization, including Porto Alegre, Salvador, Florianopolis and Fortaleza. The involvement of Infraero, Brazil’s national airport authority remains unknown. In the past five airport privatizations, Infraero remained a 49% stakeholder in the concessions. However, the entity has been losing money, and experts say its participation must be reduced or eliminated in order to attract more bidders.
for travel to Ecuador has been growing strongly, especially after extensive promotional efforts by the country's officials," said the airline. Budget carrier Spirit Airlines will add six new Latin America destinations from Houston’s George Bush Intercontinental Airport. In June the carrier will begin non-stop flights to Mexico, Nicaragua, Costa Rica, Honduras and El Salvador.
Copa Panama’s Copa Airlines will begin nonstop service to San Francisco in September. The daily route will be between San Francisco International Airport and Panama’s Tocumen Airport. “Our flight has the potential to make a substantial contribution to tourism and general economic development between California, Panama and the rest of the Latin American region, as well as open up important markets in Asia,” said Pedro Heilbron, CEO of Copa Airlines.
Aeromexico Aeromexico began a daily flight from Mexico City to Toronto in early May. "Being able to offer our clients more and better network connectivity is one of our most important goals," said Anko van der Werff, Aeromexico Chief Revenue Officer. "This is why we are adding Toronto to our announcement of new routes for 2015, as Canada's economic capital and one of the top financial centers in the country. This new destination increases the exchange of business and tourism for the Mexican economy and the connectivity between Canada and Latin America.” - Page 4 -
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News
souTh
Terminal seT To open in
mid-2017 By Wendy Gallagher Expansion of Panama’s Tocumen International Airport seems to have no limit. And, the retail space it will be allocating is generating interest from duty free operators from abroad. Tocumen is the second busiest airport in Latin America in terms of passenger movements, second to São Paulo’s Guarulhos. This year the airport will handle approximately 13 million passengers. In two years the airport will be able to handle 25 million annually and plans for further expansion will see the airport able to handle up to 33 million passengers (in line with studies showing expected tourist growth) over the next 10-15 years, according to airport spokesperson Melissa Araúz. Expansion of the south terminal is about 44% complete. Under construction since March 2013, once complete in mid-2017, the terminal will offer 9,000 square metres of retail space. It will have 20 new gates
and eight remote gates, which added to the 40 existing in the actual terminal will make a total of 68 gates. “The sizes of the spaces have not been chosen yet. We anticipate we will have upscale stores in this new area of the airport and also the traditional duty frees stores that sell liquor, perfumes, cosmetics, etc. We want to make sure we have the right mix of duty free shops for the passengers moving through our airport,” says Araúz. “We´ve been already approached by important duty free operators from Europe and Asia. This is why we are currently studying the different categories of business we could develop to satisfy our users.” The value of the contracts has not been decided, as it will depend on the size and location. It will be part of a bid process. “We estimate the terminal will be ready in the second trimester of 2017, so most likely in the beginning of 2016 we will tender for the duty free shops,” says Araúz. The tenders will be for five and 10-year contracts, she says. Currently, Motta Internacional and Grupo Wisa operate duty free stores in the main terminal, with their contracts expiring in 2018. A management review last year of all Tocumen’s concessions did not affect the contracts held by Motta and Wisa. However, 17 concessions affected the flow and circulation of passengers and won’t be re-tendered. There are 23 commercial spaces available, says Araúz, of which seven have been tendered, three are in process and the remaining 13 will be tendered in the coming months. The Panamanian government owns 100% of the shares of Tocumen airport. The airport was recently awarded by Best Airport of Central America by Skytrax. The airport is currently working on creating a cultural and historic hub to create a storytelling concept of the country’s history.
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News
AirporT Shopping ‘Boring’ Architect calls for more diversity in airport retail experience By Wendy Gallagher Expect the unexpected for the facelift about to take place at Rio de Janeiro’s international airport. Architect Robbie Gill, owner and director of The Design Solution says airport retail needs to be shaken up. “Jesus it’s boring,” he tells The Latin America Report. “They (airports) all look the same.” Gill and his team are working with Rio Galeão (airport operators consisting of Changi, Odebrecht and Infraero) planning the spaces for the renovation. “Ode- Firm planning brecht has been absolutely Rio airport renovation. brilliant to work with,” ‘The privatization in says Gill. “The privatization in South America has South America has really really opened up opened up opportunities,” says Gill, adding some of opportunities.’ the bigger, older terminals are in need of an overhaul. --Robbie Gill The Rio terminals are “big chunks of concrete. There The Design Solution is a brutal feel to those terminals,” he says. His plan is to give the terminals “heart, smiles, colour and experience.” Included in the renovation is a level in T2 that is under utilized and repositioning the operational aspects of the building. “There will be a compelling change to the way the airport operates,” he says. Stating that his firm has worked for both sides of the fence in airports (designing airport space as well as commercial use) “puts us in an interesting position. Architects usually like to control things,” he laughs. Gill firmly believes that when planning airport space, “every passenger needs to see an airplane.” He adds unlike a shopping centre, “airports are like a sausage factory. In one end and out the other. The key is to manipulate the flow.” Offering a wider variety of retail stores will be a “bit of a learning curve,” says Gill. He agrees quality, - Page 8 -
popular retailers have a proven track record of making money for airports, something he calls a “most unfortunate trend” because it causes airport operators hesitation in making any changes. However, spend per passenger is declining in most airports, says Gill. Airports that are reporting increased retail sales figures are doing so because passenger numbers have increased, not the spend, he says. Because limited space means an airport is never going to offer a huge choice of options, Gill says it’s important for commercial directors to attract stores that “give people a surprise...an opportunity to buy things that aren’t offered on the high street. “We need more diversity,” he says. “The best spenders are people going on holiday. They are great consumers and customers,” Gill says, adding they should be treated to a greater and more unique shopping experience. One of his proudest projects was his involvement in the expansion of Gatwick’s North Terminal 15 years ago. “To me that was the start of the airport revolution.” Gill says it was the first attempt the British Airport Authority (BAA) made in bringing in quality retailers. “We were right at the forefront.” It was after this project, Gill says he decided to focus strictly on airports, with 45% of his work done on airport terminals and another 45% on working with leading travel retail and duty free operators worldwide creating retail spaces. Naturally Gill has his favourite airports, which vary according to category. He likes Changi Airport in Singapore for its customer service and wide-open spaces; Hong Kong International Airport for its architecture; and London’s Heathrow International Airport for its retail offer, which he acknowledges, was a project his firm worked on. We’re confident that after Gill puts his touch on airports in Latin America, a new favourite will appear on his list.
News
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News
a u To Tom o b i l e s , appliances, home goods
Artist rendering of new London Supply store to be built in rio gallegos Free Zone.
New London Supply store to offer wider variety of goods By Wendy Gallagher Don’t tell anyone at travel retailer London Supply that there is a currency problem in the region. For the Argentinean retailer, it’s business as usual, and that business is growing. London Supply recently secured a 30-year concession for a store in southern Argentina known as the Rio Gallegos Free Zone. Located in the province of Santa Cruz, London Supply will construct and operate a 2,000 square-metre shop, scheduled to be open in about a year. Magdalena Ducos, London Supply’s Commercial Director, says the
store will feature the traditional duty free categories, as well as home appliances, home and design products and a special focus on electronics. “In this area of the country, electronics is a very important category, so we will focus on it as one of the major items,” says Ducos. Another item London Supply will be selling is not normally found in duty free shops. The company will sell imported vehicles. According to Ducos, residents in the province are permitted by law to purchase an imported car in the free zone, once every five years, without paying the import tax. “We are moving forward with different brands,” she says. The province’s capital city, Rio Gallegos, is located 70 km away from the border between Argentina and Chile, and 200 kms from the Punta Arenas Free Zone in Chile. London Supply hopes to capture the travellers who are currently going to the Chile free zone to make purchases. - Page 10 -
Meanwhile, London Supply continues to experience success with its Duty Free Shop Puerto Iguazu, located on the Brazilian border. While the Brazilian Real has fallen dramatically in value this year, London Supply says it’s not experiencing the effects. “Last year we remodelled the store, doubled the size of the shop and warehouses,” says Ducos. “Our major customer is the Brazilian and the Argentinean, not the international traveller,” says Ducos. Iguazu Falls is a major tourist destination, and one of the Seven Wonders of the World. “When you have an economic situation in the region, people stop taking international trips and instead, travel within the region,” says Ducos. “When you are in an area with 100 percent focus on tourism, the currency variations affect your business in a lesser way. If you have the tourist destination factor, it’s a plus for the business,” she says. “We pay attention to currency fluctuations, but we are not 100 percent dependent on them.”
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News
Simplythebest... For seven consecutive years, Jorge Chavez International Airport in Lima, Peru has been honoured with The Skytrax World Airport Award as best airport in South America, as voted on by travellers. The Latin America Report decided to find out why LIM is such a popular airport.
By Wendy Gallagher
T
here are many good reasons visiting Peru, a diverse country with rich culture, historic places, amazing nature and wildlife and great people. With the rise of the gastronomy of Peru, it makes visiting the country a culinary destination in its own right where guests can choose from a multitude of restaurants, which have been ranked as top restaurants in Latin America and the world to visit. So imagine enjoying hallmark dishes like Ceviche or Lomo Saltado with a Pisco Sour – the national drink of Peru – while watching the hustle and bustle of arriving and departing aircraft from the window at your restaurant table. “Transforming Jorge Chavez International Airport into a leading Latin American hub took time, know-how and a lot of work,” says Sabine Trenk, COO of Lima
China Wok, a fusion of Chinese and peruvian food. - Page 12 -
Airport Partners. In 2001, Lima Airport Partners (LAP) was awarded a 30-year concession for constructing, operating and managing the airport. Since then, the LAP consortium – which is led by Fraport AG (the owner and operator of Frankfurt Airport) as major shareholder and the provider of airport expertise – has invested U.S. $337 million in remodeling and constructing terminal and airside facilities. In addition, LAP has transferred more than $1.4 billion to the Peruvian government for regular concession fees, taxes and transfers to public entities since the concession began in early 2001. The airport’s first development phase included a 65,500 square metre terminal expansion and the creation of ‘Peru Plaza’ – a new 5,500 square metre landside commercial area that has been “immensely popular from the very beginning,” says Trenk. “ The idea of the food court within the Peru Plaza was to provide not only appealing space for passengers but also for the many greeters accompanying friends and family prior to their flight. Since its inauguration, Peru Plaza has un-
News dergone several changes to remain attractive and to meet changing customer needs and tastes. In April 2015, for example, we opened China Wok – as a restaurant that offers chifa, a fusion of Chinese and Peruvian food. Another new outlet added in April of this year is Chocolat by Republica de Cacao. This boutique presents chocolate at its ultimate expression, inspired by the different Latin American influences,” adds Trenk. After the first expansion LAP continued Peru Plaza adding terminal area, which now totals 87,000 square metres. “We have improved passenger flow and processes by adding emigration control points and passenger security lanes. Furthermore, to enhance the Lima Airport experience we have provided more space for additional new shopping and food and beverage outlets, plus a major expansion and remodeling of the departures duty free shop,” says Trenk. A recent organizational change of the airport retail/commercial management area is aimed at achieving even closer cooperation with the concessionaires – thus opening up new opportunities for both parties. According to Trenk, “We have installed dedicated teams for duty free, specialty retail, FAB and services to work with our concessionaires, so that through a collaborative approach we can achieve the best possible shopping experience for our passengers. From less than four million passengers in 2001,
LIM’s airport traffic has almost quadrupled to 15.6 million in 2014. Forecasts indicate that traffic in the region and Lima will continue to grow above average. “By 2020, we are expecting to surpass 23 million passengers per year. Therefore, last year LAP commenced phase three of the airport development program. This latest expansion of Jorge Chavez International Airport will certainly be the most ambitious in the airport’s history. It includes the construction of a new passenger terminal, airside facilities and a second runway,” says Trenk. Another upgrade of the existing terminal is part of the expansion plan, which comprises improvements to the duty free shops and a new commercial area as core part of Terminal 1 in the coming years. In advance of the remodeling of the duty free area, a MAC store has been opened. Fraport’s international spokesman Robert Payne stresses, “Lima Airport is a classic example of a winwin project that has benefitted passengers, the city of Lima – a global metropolis – as well as Peru and South America in general. The airport now has improved quality, higher investments in infrastructure, services and training, top management, as well as more revenue for the public sector. The airport is an important calling card for Peru, which has been one of the top performing economies in South America in the past decade.”
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News
Wine duo shows top premium brands at ASUTiL
Barry geoghegan Travel retail Brands
S
eva Group is looking to establish itself as the ‘go to’ wine people in global travel retail.
Exhibiting at the ASUTIL show in Panama, Laura Klingeman of Seva Group, in partnership with Barry Geoghegan of Travel Retail Brands Ltd., will showcase some of the world’s top quality premium wines. “We are on a mission to bring some of the wine world’s ‘little gems’ to our friends in Latam and throughout the globe,” says Geoghegan, who holds a Wine MBA, which he says is very important in establishing their wine credentials to operators. At the recent TFWA show in Singapore, “We brought together many like-minded quality family wine companies and held a Wine-Hour opening wines from these excellent producers,” says Geoghegan. During the ASUTIL conference in Panama, “We intend to open top end wines from Craggy Range in New Zealand. The wines of Craggy received the ultimate honour when named by Wine Enthusiast Magazine ‘New World Winery of the Year’ in December 2014,” says Geoghegan. “We will also be tasting the excellent range of wines from Australia’s most-awarded wine company, Taylors. Taylors Saint Andrews Cabernet Sauvignon won the trophy for the best Cabernet Sauvignon at the IWSC Awards beating 11,000 other Cabernets to the top prize. In addition we continue to bring great innovation to the operators with the wine gift sets from Paul Sapin and the novel new Petit Voyage (187ml with a glass attached for convenience). Finally we will be pouring some excellent new wines from Spain which have an incredible price: quality ratio. For further information contact Laura Klingeman at l.klingeman@seva-group.com - Page 14 -
Laura Klingeman Seva group
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News
LATin TrAvELLErS ThinK piSTAChioS ArE WonDErFUL By Wendy Gallagher
London Supply Duty Free Shop puerto iguazú.
It’s one of the few items where travellers aren’t comparing prices with their local market, and it’s keeping the cash registers busy. Wonderful Pistachios has exploded throughout the duty free and travel retail arenas, since first making its debut four years ago, and there is no sign of a slowdown. James Kfouri, GTR sales director for Wonderful Pistachios reports strong growth for the product throughout Latin America, and worldwide. In a recent interview with The Latin America Report, Kfouri says sales are up 75% year to date in travel retail. Those are the kind of sales figures most brands only dream about. So, what is the secret to the brand’s success? “It’s alternative,” says Kfouri. “We get thrown into the confectionery and fine food sections. There is noone else competing, or the competition is very limited. Confectionery is an impulse buy. Now travellers have a choice of buying a relatively healthy snack which they couldn’t buy before.” Now in 52 travel retail locations, Wonderful Pistachios is purchased mainly for a personal snack, and not
as a gift. In many cases, Kfouri says the bags are more expensive in travel retail ($16 for 300 grams) than the domestic market. “But so are a lot of items in an airport. A bottle of water can be more expensive than a beer or a glass of wine,” he says. At London Supply’s Iguazu border store, sales of the nuts are booming. The store places the nuts in its liquor and fine food sections as a secondary product. As well, during alcohol tastings, Wonderful Pistachios are served. “It’s nice to have some snacks available when serving customers a drink,” says Kfouri. Throughout the region, South American duty free retailers were “very quick to take the brand,” says Kfouri. “They are brilliant.” Wonderful Pistachios are now sold on board Buquebus ferries, which travel between Argentina and Uruguay, through Bernabel Trading, as well as in duty free stores in Paraguay, Colombia, Uruguay and Guyana. One obstacle for retailers not yet selling the nuts is they have nothing to compare against, says Kfouri. While currency issues in some South American countries do have an impact on sales, Kfouri says, “There are always going to be blips. It’s part of travel retail. If one market is up, one is going down.”
YTD travel retail sales up 75%
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Products
Dufry Mexico
London Supply Argentina
ready, set, LAUnCh
Miami-based fragrance and cosmetics distributor Essence Corp. experienced a busy first half with numerous fragrance launches throughout the region. Euroitalia’s Moschino Toy and Versace Eros Femme launched throughout the region in May. Jimmy Choo and Lanvin, both by Interparfums Paris were launched between February and April.
Dufry Argentina
Dufry Argentina
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Products
Erno LASZLo Erno Laszlo introduces two new skin-quenching new additions to the Hydra-Therapy Collection: Hydra-Therapy Refresh Infusion and Memory Sleep Mask. Addressing key modern day environmental stressors that dehydrate the skin, like UV radiation, pollution and skin damaging toxins, these treatments are said to deliver instant hydration for parched, stressed and tired skin.
BELLroY Bellroy introduces two new wallets, the Phone Pocket and Phone Pocket Plus. The Phone Pocket Plus offers space for a phone, cards, bills, coins, house key, passport and more. According to Bellroy, wallet forums consistently see the phrase, “If only this held a phone.” The company listened, and crafted a #phonepocket.
TYKo The bohemian fashion trend has a personal endorsement on YouTube of Tyko Travel Retail’s Hippie Chic ‘Boho” watch by blogger/presenter/celebrity Courtney Sixx. Hippie Chic is now listed on 98% of Tyko’s 300 listings for 2015. “The increased hype around bohemian fashion generally is really fantastic news for Hippie Chic sales – especially when we benefit from celebrity blogger endorsements,” says Tyko Director Global Travel Retail Martin Lovatt. - Page 20 -
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Products
go TrAvEL
signed to adhere to airport liquid regulations, the malleable bottles allow travelers to take all of their favorite grooming products with them on the go.
The new Silky Eye Mask from Go Travel adds a touch of luxury and the design allows the wearer to block out intrusive light, resulting in better quality rest and maximized sleep potential, both in the air and on the ground. Go Travel also introduces a new Twist ‘N’ Set combination lock. The unique “twist” design makes setting the 3-digit combination code completely hassle-free. It’s also TSA accepted. The company has also incorporated hand-luggage approved Squeezy Bottles into its range of travel toiletry solutions. De-
TrAvEL BLUE
MoSqUiTno MosquitNo introduces a full cosmetic line of anti mosquito products. The line consists of a sun+mosquito protector, a aftersun+mosquito protector, a body lotion spray+mosquito protector and a perfume man/women+mosquito protector. The series will come out in 30ml, 50ml,100ml and for the sun/aftersun product also in 200ml. The line will launch in Latin America at the end of Q2.
Travel Blue introduces a range of World To adaptors, which it believes are particularly suitable for Arrivals Shops. The World To range is earthed and grounded for extra safety and suitable for use with most electrical travel items such as laptops, mobile phones and cameras says Director of Travel Retail Jonathan Smith: “These World To adaptors are perfect for Arrivals Outlets when passengers realise that their travel adaptor is not suitable for the country in question, or they want to buy an additional adaptor at a more reasonable price. Being earthed means they are very safe to use with earthed or nonearthed appliances by travellers from some 150 countries. The rear of the pack explains which countries the plug is suitable for where there are additions to that featured on the pack front. For example the China/Australia version can also be used in Argentina and New Zealand,” says Smith.
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2015 30th Annual Convention 30e Convention annuelle “Canada’s Exclusive Duty Free Convention”
November 15 – 18 | 15 – 18 Novembre Westin Bayshore, Vancouver, BC, Canada
www.fdfa.ca
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