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Progress on ‘Trinity’ at Dublin Trading Conference
Hosted by Aer Rianta, ACI EUROPE held the 13th ACI EUROPE Airport Trading Conference in Dublin from 1-3 March 2004 - welcoming over 350 delegates.
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The 13th ACI EUROPE Airport Trading Conference and Exhibition featured keynote presentations from Brody Sweeney, founder and Group CEO of O’Briens Sandwich Bars and Colin Morley, Director of Brand and Marketing Communications Vodafone Ireland, together with the vitally important ‘Trinity’ debate on a future re-alignment of the relationships between airport landlords, retailers and suppliers.
The conference was opened by Philippe Hamon, Director General, ACI EUROPE, pictured centre with John Hume, Director of Policy, ACI EUROPE, (left) and John Burke, President, ACI EUROPE and Advisor to the Board, Aer Rianta (right).
The key afternoon session was co-chaired by Aer Rianta Retail Director Frank O’Connell and Martin Moodie, the instigator of the Trinity Forum, who said this had been an “unholy Trinity – at least in the past” and argued it was vital to find “common ground for a new model, or models” because the “new normal” in today’s business rules was constant upheaval.
Brian Collie, Group Retail Director for BAA, led with his own keynote in which he warned that the traditional tender model represents a real threat to the future of travel retail. Airports, he said, were absolutely pivotal: “It is you who decides where this goes, if anywhere.” He added that the presence of key brands is under threat. “There are warning signs all over that duty free and travel retail is less important to major brands. These are premier products in second-rate locations with third-rate service.” He concluded: “Airports long-term revenue is heavily dependent on the success of the retail sector. It’s your business. It’s up to you.”
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The debate – which lasted an entire afternoon – took the form of three panels. The retailers said the tender process was a disincentive on a range of grounds – short-termism, minimum annual guarantees and the role of outside events, in particular. Moodie commented that a recent winning tender bid for a Changi concessions was 70% higher than the second placed bid, and John Sutcliffe, Managing Director, Aer Rianta Middle East added that minimum annual guarantees (MAGs) and variable percentages won’t go away, “and we’re naïve if we think so” but argued it was the process not the model that was the issue.
The suppliers group was asked if the big houses could really walk away, and Nestlé’s Stewart Dryburgh replied that excessive pressure on margins and wider consideration of where profit actually derives could indeed force that result.
Brown Forman’s Patrick Moran said he did not foresee walking away but warned that he would work only with those “who want to work with us, and not with those who don’t move with the times”.
Moodie closed this section by noting that from 1995 to 2002 international passenger numbers grew by 22%, but duty free sales fell 2%. “Something is clearly not quite right.” The members of the airports group agreed that they had no wish to become retailers, and would prefer to leave that to the specialists, although Vienna’s Michael Tmej prudently noted: “Never say never.” The panel agreed that tenders represented only one means among a variety for selecting concessionaires.
O’Connell concluded by revealing that ACI EUROPE’s Business Forum had agreed to set up a small Task Force to develop an ACI EUROPE position within about three months with a view to producing a final paper for the Trinity discussions in October.
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