Dynamic growth to continue in Asia/Pacific, says Juul-Mortensen

Tina Milton

Print Article E-Mail Article E-Mail Author

Airline liberalisation, airport privatisation and commercial innovation will continue to drive expansion in Asia/Pacific

The Asia/Pacific duty-free market will continue to witness “dynamic” growth over the coming years, according to Tax Free World Association (TFWA) president Erik Juul-Mortensen.

Opening the TFWA Asia Pacific conference in Singapore Juul-Mortensen told delegates that airline liberalisation and airport privatisation would continue to drive duty-free revenues following a successful year in 2006.

The development of both low-cost and flag carriers prompted passenger numbers to rise by 6m to 133m in 2006 compared to the previous year. Cathay Pacific Airways’ acquisition of Dragonair, the emergence of Hong Kong and Beijing as aviation centres and the launch of low-cost long-haul flights attributed to the growth. Low-cost terminals at Kuala Lumpur International and Singapore Changi airports operated at about 60% passenger capacity in their first year of operation.

“Mature growth of the low-cost industry has opened up the market and the industry’s ability to create a flexible offer will be key to capitalising on this emerging market,” said Juul-Mortensen.

In 2006 travel-retail sales were up 8.3% on the previous year outstripping passenger growth, which increased by 5.3%. The region will reap the benefits of the outbound travel market in China and India as year-on-year passenger rates rise, while new tenders and joint venture agreements will also boost duty-free revenues.

He warned that the development in the region would not all be plain sailing as security guidelines on carry-on liquids had reduced passenger dwell times and confusion over rules for transfer and point to point travellers was still prevalent. “The issue threatens the [passenger] trust in the very concept of duty-free and travel-retail shopping, which we have all worked so hard to build.”

He commended the work of industry associations such as the Asia Pacific Travel Retail Association, but urged more companies to join support the organisation as there was “still along way to go” before the issue was resolved. “We need to continue with the pragmatic approach of working within the goalposts of the regulations as the enormous scale of the issue means that cooperation is still required. We rely far too much on the goodwill and dedication of certain companies and individuals to do the hard work.”