Tax-Free Sales, The Traveler Experience, And The Airport Financial Model

Tax-Free Sales, The Traveler Experience, And The Airport Financial Model

Shops have become a core aspect of international airports. As international air traffic continues to tank this year, airports have suffered a catastrophic hit to their revenue, with retail“”a major profit driver“”under the most intense pressure ever due to the lack of passengers. "2021 is starting off worse than 2020 ended, and that is saying a lot," said IATA's director general and CEO in a statement related to the poor January data, released last week. Covid vaccination programs now underway may help restore domestic economies, but aviation still faces harsh government travel restrictions worldwide. The pandemic has, however, been a moment of enlightenment when it comes to concession contracts, long regarded by travel retailers as requiring reform. A recent leader in The Economist put some airports' take from their retail tenants' sales as high as 40%, a level that pushes concessionaires to drive a hard bargain with brands on margins, and in turn affecting prices, or choice of available products, for passengers. Disastrous as it has been, the pandemic may have made airports appreciate the importance of retailers to their financial ecosystem in a way that may change their future relationship. A December 2020 survey from airports group ACI Europe,