REVIEW OF THE YEAR 2008

By Doug Newhouse, 10 July 2009

In fact, it would have been better, but for the last quarter which significantly impacted on sales as the extent of the global financial crisis began to unfold to eventually shake the world's financial markets to the very core.
 
It would certainly be no understatement to say that in 2009 this has since transpired into one of the biggest challenges to ever face the international travel retail industry, with the rapid slump in air traffic and resulting sales falls hitting nearly all sectors of the business.
 
This has inevitably led to a major focus on stringent cost controls across the spectrum, from airports, ferry lines and airlines to retailers and suppliers, as companies find themselves under horrendous pressure to maintain what profitability they can by streamlining operations, renegotiating contracts where possible and - unfortunately - cutting staff.
 
All of which makes looking back at 2008 somewhat bizarre considering the healthy state of the industry in the first half of that year where - with the benefit of hindsight - there was only the slightest hint of what might be down the road six months later.
 
A number of big events shaped 2008 and have continued to play out in 2009, but perhaps one of the most serious was the number of airline fatalities in the wake of rocketing fuel/oil prices. No less than 25 small to medium-sized airlines simply collapsed worldwide - either in the run up - or as a result of the surge in crude oil prices which peaked on July 11 2008 at an almighty $147 a barrel - literally double the price of the same barrel six months earlier.
 
But the beginning of last year also saw a lot of new airport infrastructure come on stream, with the S$1.75bn ($1.2bn) Terminal 3 opening at Singapore Changi Airport's - complete with 100 retail shops and 40 food and beverage outlets. This was planned with almost military precision as Changi and the Civil Aviation Authority of Singapore set yet another quality benchmark for the rest of Asia - and the world.
 
In Europe, it was a different story when London's £4.3bn ($7bn) Heathrow Terminal 5 opened in March 2008 however. BAA was blamed for continual breakdowns of the baggage system which ultimately resulted in the misplacing of 32,000 bags. While LHRT5 is now regarded as one of the most efficient and pleasant in the world, it is unfortunate that this opening will long be regarded by other airports as a case study in what not to do when it comes to the handling of baggage, media and customers.
 
Meanwhile, in the first quarter of 2008 it should also not be forgotten that large multi-million dollar terminals opened at both Beijing Capital and Shanghai Pudong airports (without any significant hitches), significantly elevating quality standards in customer service and retail at both locations.
 
The quality bar was also raised in the Asian off airport market with the opening of DFS Group's huge new Galleria at the Four Seasons Hotel in Macau and earlier in the year the global travel retail market was also reshaped as BAA sold its World Duty Free arm to Autogrill for £546.6m ($890.6m) and acquired the remaining 49.95% of Aldeasa which it did not previously own.
 
However, while it all seems far away now, the travel retail boom times that were predicted by some in all of the hype - both ahead and after last summer's Beijing Olympics - failed to transpire at Beijing Airport in just the same way as they did with the two previous events held in Greece in 2004 and Sydney in 2000.
 
Back in Europe there was also pressure with an all-time low of sterling against the euro seriously impacting on Britons’ buying power in most traditional holiday destinations, including Spain, Greece, France and the USA.

Last year also saw a change on the global travel retail board as Dubai Duty Free generated $1.1bn in duty free and travel retail sales - effectively steaming past Incheon and Heathrow airports as the world's new leading travel retail location by sales.