On the ground with Moscow Duty Free - moodiereport.com · On the ground with Moscow Duty Free David Hope was around for many of the seminal moments in the early history of Aer Rianta

THE WORLD ROVERS | Russia

On the ground withMoscow Duty Free

David Hope was around for manyof the seminal moments in theearly history of Aer RiantaInternational (ARI), and made hismark as the first General Managerof the Aerofirst Moscow Duty Freejoint venture. In this interview heshares his memories of life inRussia as ARI took its firsttentative steps overseas.

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The rich seam of Aer Rianta’s overseas his-tory glitters through the career CV ofDavid Hope. It covers the growth ofShannon duty free, the legendary start-up of Dubai Duty Free, and the role for

which he may be best remembered – the first GeneralManager of Moscow Duty Free. Not only has he beeninvolved at some seminal points in the company’s histo-ry, he’s filled nearly every possible role too.

Having joined the Shannon Sales & Catering Organisa-tion of O’Regan and Skelly in 1969, Hope began corpo-rate life there overseeing the computerisation of theshopping and catering division, and later managed thesame systems at group level once Aer Rianta was createdto oversee Dublin, Cork and Shannon airports. It was thisrole, indirectly, that took him to Dubai as part of the now-legendary group of ten Aer Rianta staff hired to openDubai Airport’s first duty free shop.

“I was asked to travel as part of the team primarily to setup the cash register systems and implement stock andsales management functions,” recalls Hope. “I spent threemonths on site there and you can say we really groundour teeth there in that time. The hours were fierce, andthe heat and dust a far cry from what we were used to; butwe got the job done.”

The experience of “getting the job done” in difficult

circumstances would be repeated in the next phase of hisoverseas career for the group. Having returned fromDubai to become sales manager at Shannon Duty Freeunder Liam Skelly, Hope was approached about anotherassignment in 1987: this time as Project Manager (andeventually the first General Manager) in Moscow.

“Aer Rianta was on the verge of signing the contract withAeroflot to start Moscow Duty Free, and Skellyapproached me to become project manager. Basically itwas a turnkey job: building the team, creating the shop,negotiating on the ground, overseeing all the buying, themarketing, the logistics,” says Hope.

He is quick to praise the role of Skelly, not only in nego-tiating the contract to start with but also in allowing theteam on the ground the room to make their own deci-sions – not necessarily in the traditional style of state-owned Aer Rianta.

“The problem was that communications with head-quarters were virtually non-existent,” Hope says. “Wehad to book phone calls from the airport up to 48 hoursin advance, and for a long time all our contact was viatelex. So the ability to make decisions on the ground wascritical, and here Skelly gave me his backing.”

After being approached about the job, Hope’s firstthought was “This could be career suicide.” But having

Russia | THE WORLD ROVERS

Moscow Duty Free: critical in building the reputation of the Irish abroad

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thought it over, he agreed – with one proviso. “I said tohim, ‘I can’t communicate with you daily, and what I haveto go on is a broad budget and broad objectives. The bot-tom line is this: I need you to allow me to change tack onthe spot, make decisions on the fly, because I can’t wait foranswers. So you need to trust me, to support me back atbase, and support me in the mistakes I make as well as thepositive things I do.’ And he agreed.”

Not only was Aer Rianta the first international tradingoperation at a Russian airport, it was also a pioneer inchanging the face of retailing in the country. “In the Sovi-et Union you’d have one buyer for all size 14 shoes inRussia, or size 16 shoes, or sugar, or whatever,” saysHope. “And all the product imported from overseas camein one container of the same product.

“But we were moving mixed containers – of fragrances,of liquor, of confectionery – and that caused a problemfor Customs, who frequently stopped the shipments com-ing through. We had to change the rules totally on howretail shops were stocked. We were trying to negotiate ina Western style in a country that had no experience ofthat way of working. It was teeth-grinding at times.”

The telex system of communication might sound likesomething from times long gone, but it’s less than 20years since Hope and the start-up team were forced tocreate a business with communications that rated littlebetter than pigeon-carrying for efficiency and speed. “Weused Aeroflot’s telex system,” recalls Hope, “but it was-n’t just one or two of us – it was how the shop-fitters andthe buyers got messages out too.”

Other ex-pats in Moscow at the time scorned the ideathat Moscow Duty Free would open by May Day, withwork having commenced in January. “You could see theirpoint,” says Hope. “Suppliers coming in laughed at theidea that we’d open on time. It wasn’t just the conditionswe faced, it was the culture of retail.

“Most of the staff were used to lengthy, regular stock-tak-ing, even at the busiest times, or they stood around chew-ing gum or being surly. But we convinced them that theywere representing Russia, and we tried to treat them withrespect, which made a difference. The Russians soon tookresponsibility, and when the shop opened they were asproud of it as we were.”

The experience wasn’t just challenging; it was, at times,close to horrific. “We lived in terrible conditions. Wemoved into two floors of a hotel that was being renovat-ed and the dust was extreme. The cold was too, althoughwe worked in that as well. One time I was out in winterin my shoes, not my boots, and by the time I got homemy feet were so frozen that I couldn’t feel them, evenafter sitting in a hot bath. Eventually the feeling did comeback, but I was pretty close to frostbite.

“Finding food was no easier: I lost two and a half stonein six months. I remember people hanging used teabagsfrom the curtain rails to dry them out, so they could usethem more than once. And I recall two of our shop-fitters, two brothers, going into town to forage for food;they spent all day in town and finally came across someeggs. Having bought heaps of eggs, they travelled homeon the busy Metro at rush-hour protecting these eggs

Few of the Irish companies that studthe history of travel retail would haveachieved much without the criticalinput of non-Irish executives, and AerRianta International is the best exam-ple. One of the company’s most expe-rienced and effective senior managers

is Scot Bill Maxwell, best known forhis role as ARI’s ‘Mr Russia’.

It’s a title that in one sense is grand,but in others too narrow. The formerMoscow Duty Free General Manager’sresponsibilities these days encompassmuch more of ARI’s international busi-ness – from Russia to the CIS to NorthAmerica, even to Barbados.

But it’s still Russia that has loomedlargest in Bill Maxwell’s career.

“I’ve had that Mr Russia label for along time, but I’m proud of it too,” hesays. “If I’m seen as following in thefootsteps of Liam Skelly as the com-pany’s ambassador, then that’s a tra-

dition I’m proud to continue.”

It’s a role he’s played to near perfec-tion as the company’s vigorous entryinto Russia, and its subsequentdefence of its position as the duty freepioneer, has come under attack fromstiff competition. Russia remains verymuch at the core of ARI operationstoday, and Maxwell’s contribution tothat has been immense.

Maxwell is a retailer through andthrough. After school he began acareer in supermarket retailing beforejoining Trusthouse Forte in Glasgow,handling accounts for the company’sScottish duty free and duty paid concessions.

Great Scot at the heart of Irish–Russian love affair

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as if they were the last items of food on the planet,thinking only of the beautiful omelettes they’d make ontheir return.

“After finally getting back to base, and after the stress ofmaking sure the eggs didn’t break, they were triumphant:‘Here we go, omelettes all around lads,’ they shouted, andstarted getting out the pans to cook. Until, that was,someone picked up an egg and tapped it, and found theywere all hard boiled!

“Many people relied on food parcels from home, thoughthese were subject to the same controls as stock comingin and were often delayed. It was a huge relief when wefinally opened our own downtown shops.”

But out of that adversity came a strong bond between the12 or so initial team members from Ireland, not to men-tion their Russian liaisons. “We would have got nowherewithout people like Eugene Vasiliev, who was my right-hand man and fixed up a lot of situations that could havegone badly,” says Hope.

“There was Levon Saryan, the first Director General,and Alexander Antoniants, without whom we would havebeen dead in the water. There was also Boris Yididovich,the Airport Manager, with whom I had to negotiate atevery turn, and with whom I had to learn to drink vodka.

“But the authorities there respected the effort we put inand they responded: they didn’t make it easy, but theyyielded when they saw that it made sense. I’ve made someof the best friends I’ve had in my life through theMoscow Duty Free experience, people who were criticalin getting the business up and running. They are as much

as part of the Irish success story abroad as the Irish are.”

That respect for the partners in the venture, and staff onthe ground, shines through in many of ARI’s operationsabroad, even today, and is a core value of the group, andof other companies – Dubai Duty Free for example –infused with the Irish pioneering spirit.

“We treated the staff, wherever we went, not as sub-servients, but as equals, and they responded to that. I sawit in Russia, I saw it in Dubai and I saw it in Thailand lateron,” says Hope.

But there are other aspects to the Irish success story,believes Hope. “We’re from a small country, and we’reperceived as presenting no threat to the local authori-ties. I think, although it was never discussed, some ofthese cultures saw that Ireland had stood up to anempire and gained its independence, long before manyof them. Not only that, but Ireland was a positive influ-ence in the United Nations for many years, one thattook positions supporting fair play, and not always onthe side of might.

“But beyond that, on the ground, we worked very hard.In Dubai we were in a hole of a basement in the old air-port working in dreadful conditions, yet again we gotthe job done. And unlike some other nationalities thatgo in and demand that the local authorities uphold theirend of the bargain, we never made demands or tried tobully people. We cajoled, we asked, we appealed, wepersuaded, but we were never high-handed in doing so.”

Maybe above all, though, there was the inherent stub-bornness of acting in adversity and seeing the job

“Coming into the organisation asa retailer you were able to make a dif-ference. That was in the days whencaterers ran duty free shops. I helpedintroduce new elements into their sys-tem: like part-time staff to cover peakperiods, or stock management alongthe lines of the supermarket world.

“At Glasgow Airport we were the firstretailer to introduce half-litre promo-tions and fragrance vouchers to boostsales in the key categories. We

Partners at play: The Aerofirst footballteam, featuring ARI stalwarts such as Bill Maxwell and John Kilmartin, capturesthe 2000 European Airports FootballChampionship

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through, regardless of what anyone said. “When we werein Dubai we let off steam at the weekend and I don’t thinkthe other ex-pats knew what to make of us. They weresure we wouldn’t open the Dubai shop by the Christmasdeadline, so that spurred us on to make it happen.”

But no matter how determined the Irish were, there werestill huge obstacles to getting the Moscow business off theground. Suppliers would only deal with the operation ifthe parent group Aer Rianta guaranteed payment.

“Many weren’t convinced their goods would get to mar-ket and we had to find ways to reassure them. Ultimate-ly the most secure route was through Finland, where therisk of hijacking was less than through other countries.Even so we had to use convoys rather than single trans-ports, and even then you had the possibility of goodsbeing stopped at the border.”

Another serious concern, which came to a head on theeve of Moscow Duty Free’s opening in May 1988, was the

reluctance of the Soviet caviar lobby to supply the oper-ation. “We had problems getting Russian souvenir dollsand even vodka, but caviar was the worst,” says Hope.Between January and May 1988 I had something like 30meetings with people in the organisation – a very pow-erful organisation in Russia.

“Every time we all handed out our business cards, andcollected all of theirs, but never once did I know who Iwas supposed to negotiate with, or who the top man was.They sat stony-faced across the table from us, giving usprices that were two or three times the prices on offer atHarrods or in the US stores, and far more than we couldget Iranian caviar for. It was potentially a huge rip-off.

“But our airport contacts felt they couldn’t do anything– they were even warned off helping us, so powerful wasthis organisation within the state apparatus.

“At the final meeting in April 1998, just before weopened, they had kept us waiting for hours in the heat

managed to reduce queuing, aproblem at the time, and raise spend.”

From Trusthouse Forte Maxwellmoved to Allders International atLondon Heathrow before another brief

stint in high street retailing precededthe career-defining move of his career.

In June 1991 ARI was seeking anOperations Manager for the Russianmarket, and Maxwell fitted the bill. He

initially became involved in the set-upof downtown venture the Arbat IrishHouse, which was highly successfulfor some years, as well as the airportbusiness. And the longer he spent inRussia, the more critical an assetMaxwell became for the company.

“The Russians didn’t find it easy totrust foreigners,” says Maxwell, “butthe longer you spent getting to developrelationships the more it made a dif-ference. Those relationships grew intopersonal friendships, which is a partof the ARI culture everywhere now.”

Those people include MichaelDzamashvilli at Aerofirst, AnatolyShashin at Lenrianta, Vladimir Sai at

Bill Maxwell with John Sime, Duty FreeManager at Emirates (fellow Scot andformer ARI executive)


Securing supplies: Negotiating with the powerful Soviet caviar organisation proved one of Hope’s toughest Russian challenges

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before they all trooped in and we all swapped businesscards once more, without any formal introductions. Iasked my colleague Eugene Vasiliev to translate exactlywhat I said, and not to tell them what he thought theyshould hear, although understandably he was reluctant to:afraid for his job, his career.

“So I agreed I would try to help him get a post with ARIif it all went sour for him, to which he agreed. So therewe were, me with millions of dollars of caviar sales in thebalance, Eugene with his career in the balance, and I tooka deep breath and began.

“I told them I didn’t know who the chief negotiator was,but I said it’s clear that you don’t want to work with aRussian government operation at the country’s numberone airport, in a location with high visibility, one thatguarantees millions in sales. And you don’t want to sellto tourists here because you’re charging three times theprice elsewhere.

“I said to them: ‘What shall I tell the Minister ofDefence, who is coming to open the new facility, whenhe asks why we are stocking Iranian caviar? What shall Itell Mr Shevardnadze, when he travels through to see MrSkelly in Shannon? All I know is that there is one personhere who is responsible, but I will pass on the businesscards of every person in this room and say that they col-luded in this fiasco.’ And we walked out.”

Four days later Hope had his caviar – and not at threetimes the Harrods price!

But it wasn’t all misery for the Irish in the early days ofMoscow Duty Free, as Hope and others who were there

consistently stress. The Russians could be the most gra-cious of hosts as often as they were bureaucratic sticklers.

When Hope was looking for local souvenirs for the storehe came across a supplier of beautiful Russian Matriosch-ka dolls – like Lara from Dr Zhivago, says Hope – whowas based in the Arctic north of the country. “We were soimpressed by these dolls that we wanted more, but gettingsupplies was very difficult. We had a visit from what Ithought was a salesman – he turned out to be the localDeputy Minister of the northern province – but he onlybrought two boxes and he refused to give me a price.

“We eventually agreed that I’d give him half of what wesold them for, and they flew out the door. To secure a rea-sonable supply of these dolls I had to travel there, andwhat a sight met our eyes as we left the plane after thethree-hour trip.

“There was a motorcade flanked by outriders on each side,and the ‘salesman’ brought us to a huge exhibition hall,which housed every single supplier in the region. And itwasn’t just suppliers of dolls; there were makers of furni-ture, farming implements, barbed wire, cartwheels, alllooking for a slice of our business! They wanted me to seeeverything, so I went around and polite as I could,thanked them for coming and showing me their wares.

“Just as I was thinking that we should make a move tocatch our return flight, they brought us to a huge banquet-ing hall, with fine food and vodka galore. Every personthere made a speech about Soviet-Irish relations, towhich I had to respond every single time, and of courseraise a toast in their honour every time. They brought outa whole side of venison, fish platters, the finest sturgeon.

Kievrianta, ARI’s Domodedovo partnerAndrei Kuleshov and Eugene Vasilievat Vnukovo.

It’s no accident that the Irish–Russianalliance has succeeded over manyyears, believes Maxwell. “The Russianswould see themselves as similar tothe Irish in many ways,” he says.

“They’ve been through war and pover-ty, but have always faced it withhumour, and are always ready with aglass. It was always important thatIreland was a neutral country, too.”

As a business, ARI’s flexibility in newmarkets has proved a sound formula,he says. “We have been able to tailor

the business to different requirementsrather than insisting on our way beingthe only way. And we also make surewe have people on the ground every-where we go.”

Maxwell has been instrumental in ensur-ing that the business remains in placetoday – even if competition within theMoscow airport market means Shere-metyevo isn’t the force it once was.

Progress through partnership: The board of Aerofirst in Shannon in 1992

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“And while we ate, drank and made speeches, the passen-gers on our return flight were sitting on the tarmac wait-ing and waiting, although we didn’t realise this at the time.They held up the Aeroflot flight for three hours until wewere done. I arrived at the flight laden down with gifts andhugely embarrassed.”

After Moscow Hope returned to Ireland to head the Pur-chasing & Distribution function for the fledgling AerRianta International group. In the early 1990s thisserved Moscow and the burgeoning St Petersburg, Kievand downtown Moscow operation (which at one time wasworth over US$50 million a year) as well as the shops onthe Finland/Russia border. Hope was also around for thecompany’s near-miss in Tbilisi Airport, Georgia, in 1988.

““We were about to start up operations and had managedto import our computer systems, with great difficulty,into Georgia, when war broke out there. Luckily wemanaged to get most of the systems out again, althoughit wasn’t our primary concern. That was our safety – wewere caught in the city with bullets whistling over ourheads. Once we extracted ourselves from there we didn’tventure back.”

Hope followed up with supporting roles in the growingMiddle East business, advising on the advantages of cen-tralised purchasing, before getting involved in evaluatingstart-ups from Karachi to Kuwait to Warsaw – all excit-ing ventures at the time, each ultimately undertaken withvarying degrees of success.

“It was through these ventures that I got involved with ourAsian business – first in Thailand, then in Beijing. I was sup-porting our new start-ups while retaining responsibility

for buying, and at the time Asia was perceived as a signif-icant opportunity. When we got the Tourism Authorityof Thailand contract (which led to the company openingat the World Trade Center site in downtown Bangkok)I was asked to support that project.”

Since leaving ARI in the mid-1990s Hope has beeninvolved in various ventures, many of them duty free-related, including brokering the supply of products intonew markets, much of it wines and spirits.

Much has happened to the group – and its people – sincethose heady days of 1988, but it’s clear that DavidHope’s memories of Moscow Duty Free’s creation stillburn bright. Memories of the good days, and the manybad ones that accompanied them; memories of the peo-ple, the many who helped and the few that hindered;memories of the dying embers of the Soviet era, and ofan Irish spirit of adventure that first smouldered and thencaught fire amid its ruins. �


Memories of a pioneer: “I’ve made some of my best friendsthrough the Moscow Duty Free experience,” says Hope

“We knew all along that competi-tion would come; we prepared for it,and worked hard to retain our posi-tion. We have to live with that compe-tition, improve ourselves and simplywork that much harder to succeed.”

The Russian business still retainshuge possibilities for development forARI, believes Maxwell. “We work withgreat partners wherever we are in theregion, most recently in Moscow atDomodedovo, which has great long-term potential.

“Vnukovo too has strong growth withinthe Russian air travel market. Russiais ARI’s original core overseas busi-ness, and it’s still performing very

well. Now, other Russian and CIScities are ripe for development.”

Maxwell’s remit now extends wellbeyond the borders of the old SovietUnion, notably to North America,where today ARI commands a strongCanadian business.

“It’s interesting to see duty free from adifferent, and in some cases more dif-ficult, perspective. It’s a tough retailenvironment in the Americas, and tax-ation makes duty free a differentproposition for a retailer.

“But we’ve always seen NorthAmerica as an opportunity, not leastbecause of the Irish links there.”

As a Board Member of the IAADFS, theIrish link – through Scotsman Maxwell– continues through to the region’srepresentative association. “Maybe it’sthe Irish ability to rally people around,”says Maxwell, “but we do have a trackrecord of getting involved in industryassociations, from ETRC to ACI to theregional duty free associations.”

He isn’t the only non-Irish executive inthe ARI group. But after 15 years (healso spent a year with Hakubotan inGuam in 1998/99) Maxwell is thelongest serving, a man who has giventhe company great service.

And few people in the group merit theterm ‘honorary Irishman’ more.


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On the ground with Moscow Duty Free - moodiereport.com · On the ground with Moscow Duty Free David Hope was around for many of the seminal moments in the early history of Aer Rianta