ARC2011: The London Airline Retail Conference
ARC2011 took place on 30th June & 1st July in London.
Photographs can be downloaded here. | Video can be seen here. | Press coverage can be seen here. | Presentations can be downloaded by delegates here. (If you cannot find your delegate password, please contact Shelly.Guerrero@airlineretail.com.) | Session summaries can be found below. |
The most recent Airline Retail Conference took place at the Brewery venue in London on 30th June & 1st July 2011. The largest event of its type ever staged, we hosted over 400 delegates from across the globe, including over 80 delegates from around 50 of the world’s best airlines, as well as representatives from all the major inflight concessionaires (representing over 100 airlines). The conference was supported by a 51-stand suppliers’ exhibition, combining ARC’s distinctive mix of major global brands and exciting new products to the inflight market.
SESSION SUMMARIES
THURSDAY 11:30
Keynote Address: The Future of Inflight Retail
Rohit Talwar, CEO, Fast Future
Airline travel retail holds a massive untapped potential that will best be unlocked by retailers prepared to experiment with new technologies and innovation.
Delivering the opening keynote address at the London Airline Retail Conference, the chief executive of Fast Future, Rohit Talwar, warned that changes in the way products will be sold in airline travel retail are only really starting now and, seeing that products have become more complex, retailers will need expertise to sell them. He also warned that the travel retail industry is not adapting fast enough to latch onto the new mobile technologies available to use as marketing tools.
Despite the economic downturn and the threat that Europe could fall back into recession with the next twelve months, emerging markets like the Middle East and Africa promises growth with predictions being that consumer growth in Asia alone will grow with £32 trillion by 2030, Talwar said.
Taking into account that most airlines sell products to less than 20% of their passengers, Talwar listed several innovations that should improve sales during the flight experience and impact positively on how products are sold in airline retail. Some of these are new mobile technologies, leveraging inflight wifi usage and special offers through social media such as Twitter.
THURSDAY 12:00:
Improving Inflight Product Marketing
CHAIR: Michael Keating, Executive Creative Director, Ink
Sharon Huetson, Strategic Partnership Manager In-Flight Retail easyJet
John Garner, President, DFASS
Printed paper inflight brochures, magazines and catalogues will not disappear as Wifi becomes available on aircraft, leading inflight product marketers agreed at ARC2011.
The president of the concessionaire DFASS (Singapore), John Garner, and strategic manager inflight retail for easyJet, Sharon Huetson, agreed that advertising products solely on inflight entertainment systems seems to have caused a drop in sales because so many customers prefer paper catalogues and brochures.
Garner said the use of editorial content with advertising enhances the potential of selling products and people enjoy having this on board. He was joined by Huetson who said in their experience people like printed paper products, which enhance the image of products and sales.
THURSDAY 14:05
Making the Inflight Catalogue More Effective
John McDonnell, COO, The Patrón Spirits Company
Airlines, airport owners and airline retailers must find ways to work together to find innovative ways to sell products and services to passengers. This will benefit the airline industry and the consumer, the chief operating officer of the Patron Spirits Company, John McDonnell, told delegates during the first day of ARC2011 in London.
McDonnell said an excellent example of the teamwork that could improve sales and the passenger experience is the concept known as attract mode. Attract mode in retail is derived from the feature on video games typically found in video arcades where sample games are being played automatically while the console is not being used. In the same way, McDollell said, his company will be butting Patron Ice Bars in Word Duty Free shops in airports. Travellers can then sample their products and receive information about the product even before they get on board where they will be able to buy the product. They will also receive a special savings card to get discount on other products.
McDonnell also stressed how important it is to help buyers make up their mind as to what and why they want to buy certain products. To do this effectively, on board brochures need to be uncluttered with a clear message telling passengers what they can buy, what it will cost and giving them enough reasons why they should by it immediately.
THURSDAY 16:00
Middle East & Africa: Airports and Airlines Working Together
CHAIR: Jeffrey O’Rourke, Chief Executive, Ink
Keith Hunter, Senior VP Qatar Duty Free
Hugo Mills, Managing Director, DC-AV8
Erik van der Veen, Deputy COO, Dufry Sharjah
Inflight passengers have disposable income, time on their hands and are part of a captive audience the ideal profile for anybody one would like to sell a product to. It is for this reason that inflight sales are on the threshold of an international revolution.
This was the message from the afternoon discussion during the first day of the Airline Retailers Conference in London, chaired by the Chief Executive Officer of Ink, Jeffrey O’Rourke. Responding to questions by O’Rourke about the opportunities for brands to increase sales inflight, the Managing Director of global retail solutions provider DC-AV8, Hugo Mills, said the opportunity of creating a revolution in inflight marketing and sales is massive, but it will be up to individual brands to drive new thinking about the buying patterns and needs of passengers as well as research into what motivated then to purchase inflight products.
Mills said brand managers will also have to look at how they will drive sales, whether it be through sampling, better commercials, inflight advertising or simply training flight attendants to have better knowledge of products and act as sales personnel.
The senior vice-president of Qatar Airways Duty Free and Inflight Duty Free Sales, Keith Hunter, warned that many suppliers use inflight sales as a dumping ground” for products that cannot be sold on the ground. This practice taints inflight products and creates a situation where the airline cannot guarantee consistency of supply. “Ultimately we need to supply unique inflight products and quality.”
His view was supported by the deputy chief operating officer of Dufry Sharjah, Erik van der Veen, who said some suppliers now develop unique inflight products that are tailor made and packaged for inflight duty free as opposed to duty free products on the ground.
FRIDAY 13:55
Lessons from the Ground: Improving Food Quality, Value & Profits
CHAIR: Sue Williams, Associate Publisher, Onboard Hospitality
Mark Kassapian, Communications Director, SSL
The days of globalised food and drink brands dominating airport and inflight hospitality offerings are numbered. Smaller bespoke brands are starting to grow and will eventually dominate the market.
This is the message from the communications director of international food travel experts SSP, Mark Kassapian.
Kassapian said current trends suggest that globalised brands are falling out of favour with the international traveller because the ‘need states’ of the traveller has changed. Factors like freshness, health, visual appeal, seasonality and pure indulgence have become increasingly important to the airport and inflight consumer. Experiments with small bespoke brands using local suppliers have shown massive growth. Examples of these are specialised smaller airport restaurants, with menus developed by signature chefs, supplemented with external services such as mobile phone charging booths. These examples take into account the immediate needs of the modern traveller.
Responding to questions from the associate publisher of OnBoard Hospitality, Sue Williams, Kassapian said as long as accountants and logistical experts decided what passengers should eat on board, passengers will always end up with penny pinched food.
The future is receiving good produce from local suppliers and turning it into fit-for-purpose dishes that are travel friendly and of great quality.
FRIDAY 11:30
Integrating Airlines into the Travel Retail Trinity for Maximum Loyalty & Profits
CHAIR: Doug Newhouse, Editor, The Travel Retail Business
David King, David King Partnership
Hugo Mills, Managing Director, DC-AV8
The current conflict between airports and airlines to own the retail rights to travellers has the potential to damage the industry and should change through dialogue, airline retail insiders said during the second day of ARC2011 in London.
The managing director of the David King Partnership, David King, said the relationship between airports and airlines is one of conflict. Airports actively try and keep travellers in spending zones by only announcing boarding gate numbers at the very last minute, while airlines would prefer passengers to spend money inflight.
King believes people ultimately go to airports to travel and not to shop, but shop because they happen to be there. This conflict could destroy a potentially good model and it will need to change. There are opportunities to make changes to the model, but airlines and airports will need to work together to achieve this, he said.
The chief executive of global retail solutions provider DC-AV8, Hugo Mills, said whilst battle lines are drawn, there are good opportunities for brands to excel with inflight sales if they learn how to differentiate. Inflight products need to be different from products on the ground by being exclusive. Limited edition products are crucial.”
He said the first step toward greater harmony is strategic conversation between airports, airlines, brands and retailers. This is already happening in the Middle East and Asia. If Europe does not latch on to starting some form of collaboration, the industry here could be left behind.
THURSDAY 14:35
Incentivising Crew to Improve Sales
CHAIR: Amanda Felix, DFNI
Joe Harvey, Cabin Crew Sales Manager, Aer Lingus
Making products available to airline passengers is part and parcel of producing a perfect service package to airline passengers.
Joe Harvey, Cabin Crew Sales Manager at Aer Lingus told ARC2011 delegates that inflight service and inflight sales should not be viewed as separate services. To get this right his airline places great focus on training airline crew to deliver the complete package.
The training includes not only increasing the crew’s knowledge of the inflight products, but is also backed up by various incentive packages linked to the crew’s inflight sales performance. Incentives take various forms like vouchers, products, short breaks away of bonuses. Key to this is to tailor rewards to the needs of the crew, he said.
Harvey also place great emphasis on the importance of get the right message to the crew as part of their training. The secret is to listen to experienced crew because they are the ones who have learned important lessons from their interaction with travelers.
He said one should never be afraid to explore new concepts or to acknowledge the achievements of your staff. As die skills of his crew develops, so does the quality of the experience of the passengers.
FRIDAY 15:45
Why Airlines Reject Some Products & Rejoice at Others
Ann Miller, Manager Retail Sales, American Airlines
Jose Visser, Manager New Products, KLM
Building an emotional connection with passengers is one of the most important factors when decisions are taken to decide which products will sell successfully as part of the passenger experience. This means one needs to constantly find new products and experiment with new ideas, said the manager for retail sales for American Airlines, Ann Miller, at the Airline Retail Conference in London.
Miller said one of the main reasons airline retail sales managers flock to ARC was in order to come into contact with both new products and ideas. “And the products we see here in London are excellent,” Miller said. Her view was supported by the manager for new products at KLM, Jose Visser, who said for her the art of finding the correct products is to find something that reflects the image of KLM. “It’s ompartant to find new ideas, as we are confronted with here. We also need to find unique products.”
These days it is also important that the products are from sustainable sources. Visser said it is the “the moment” that decides what people buy, emphasising that passengers develop different needs during the entire travelling experience. She believes that the best way to optimise sales would be to get passengers to pre-order. If airlines could find ways to optimise pre-orders, they would be able to predict needs, position their products and “maximize every opportunity”.
Closing Keynote: The Future Traveller
Freddie Laker Jr, Senior VP Digital Strategy, SapientNitro
Modern innovations and trends like social media and the increase in the usage of smartphone applications will not only revolutionise the way airlines and airline retailers communicate with travellers but also the way the entire industry sell products.
Director of new media at the interactive marketing, creative design, and technology services SapientNitro, Freddie Laker Jr, said consumer expectations are increasing and the airline industry needs to meet these expectations head on. Some of the ways to meet these expectations are taking into account changes in ways consumers use social networking applications and how airlines learn to tap into the information derived from social networking websites.
Laker said factors that airlines will have to take into account in the future are facts such as the expectation that 1.24 billion people will use social networking sites by 2015. On top of this, some of these users will have access to three or more social networking applications. Asia alone is expected to account for more than half of social networking usage with airlines expecting to sell up to 69% of their tickets through these social networking sites.
Referring to the growth and influence of Facebook, Laker said Facebook accumulates loads of information. This includes information about Facebook users’ friends, the brands they buy, what food they eat and where they go on holiday. But this information only becomes really valuable of the information is pooled, understood and leveraged in such a way that it can be used in a way to increase profits. “We need to tap into the knowledge and use it to communicate and sell.”
Laker also warned that “smartphone penetration” into the global market could become so large that it will become one, if not the most important, factor in airline sales. Predictions are that more people will access the internet with mobile phones by 2014 than desktop and laptop computers. By 2015 there will be more than 788 million people who will pay for products using their mobile smartphones. This will mean that a large percentage of the market will book and pay for airline tickets and flight services through mobile applications.
In a similar way it is expected that 294 million people will use iPads by 2014 and that more than 50% of books purchased will be e-books. The potential is that new revenue channels will be developed as technology is being developed to deal with these new trends.
Responding to questions, Laker said in his opinion these developments create more options and business outlet channels. This does not mean older channels and practices should be abandoned, but that the business leaders will be those who explore all the options available.
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