Asutil: Good networking,good agenda, good news

In this issue:

Mega airlinecoming?Page 4

Dufry’s double digitsPage 6

Berrie goes HarleyPage 10

www.thelatinamericareport.com August 2010

News and views on the airport, airline and travel retail sectors in the region

The Latin America Report

See Page 4

By Wendy Gallagher

Shhhhhh. They say nevercount your chickens beforethey hatch, but this year’sAsutil conference is said tobe full of good news abouttravel retail activity in theregion.

José Luis Donagaray,Secretary General of TheSouth American duty freeassociation, says there isimprovement in sales in theregion.

“All areas are showing growth.There are some categories (whosenumbers) gave us a surprise,” saysDonagaray.

This year’s conference is beingheld in Puerto Rico Sept. 1- 4. Theassociation chose the location prima-rily because of its affordability. A few

of the cities within the southern coneconsidered for the conference (the

Asutil conference is held ina different country eachyear), such as Rio deJaneiro, were deemed tooexpensive in terms of ac-commodation. Anotherpreferred location, IguaçuFalls on the Brazil/Ar-gentina border is currentlyundergoing extensive roadconstruction.

In its 14th year, this

year’s event could see the largest at-tendance ever. At The Latin AmericaReport deadline, 240 people had reg-istered. The largest conference washeld in Panama two years ago with263 delegates.

Donagaray says the “goodagenda” for the conference is themain draw for the event. Included inthe speaker line up is Angela Gittensfrom Airports Council Internationaland Michael J. Reardon of the DisneyInstitute.

Quito demands morecash in airport contract

By Wendy Gallagher

A re-negotiated contract, which will more than double the revenue forthe Municipality of Quito, was struck last week between the governmentand the company build-ing the new airport.

The project’s contractcame under questionlast year when the gov-ernment stated that feescollected at the airportwere considered taxes,and therefore could notbe handled or kept byQuiport, the privateconsortium that is building and operating the new facility. The Municipal-ity also stated it wanted more revenue from the deal.

Corporacion Quiport S.A. is a privately owned company, formed byCanadian companies AECON and Airport Development Corporation

See Page 4

AECON photo

José Louis Donagaray

Airlines

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TAM/LAN setto merge

Chile’s LAN Airlines has enteredinto discussions to buy Brazil’sTAM air carrier in a US$3.7 billiondeal.

The merger would create a newcompany called LATAM AirlinesGroup. While each airline wouldoperate under their own brands, thetwo would create a network of in-ternational flights.

The merger would create thelargest airline in the region.

Mexicana flightssuspended

Mexicana airlines has filed forbankruptcy protection.

The company has stopped sellingtickets and is suspending flights in-cluding those to Brazil, Argentinaand Colombia.

The company is looking for con-cessions from its unions to savemoney. Local media suggest thecompany is also looking at offers tobuy the airline.

Copa Holdings

Copa Holdings, which operatesCopa Airlines and Aero Republica,saw increased passenger traffic lastmonth.

According to the company, CopaAirlines passenger traffic for July2010 increased 19.5 percent, whileAero Republica passenger trafficfor July grew 14.5 percent.

GOL traffic rises

Brazilian airline GOL LinhasAereas Inteligentes saw an increasein passenger traffic in July of morethan 12 percent.

According to a company pressrelease, “In line with the continuingupward trend, demand on the do-mestic market grew by 5.4 percentover July 2009, chiefly due to thecombined effect of the improvedeconomic scenario in Brazil andSouth America; and the seasonallyfavorable period for the industrythanks to the school vacations inJuly. Demand on GOL’s interna-tional route network increased by ahefty 84.4 percent over July 2009and 45.8 percent over the previousmonth, primarily due to: the contin-uous growth of international airtraffic in Latin America, especiallyheavy demand for GOL flights toArgentina, Chile and Uruguay; theresumption of demand in the South-ern Cone region, which had beenjeopardized by the impact of theH1N1 flu outbreak on air traffic inJuly 2009; and the appreciation ofthe Brazilian Real over the US dol-lar,” said company officials.

US Airways

US Airways has been given thegreen light to start a new service toSão Paulo.

The carrier will launch a Char-lotte, North Carolina to São Pauloservice next year, pending final ap-proval from the Brazilian govern-ment. In a press release, USAirways called the Brazilian city a“huge, huge business destination”with “tremendous potential.”

Passenger numbersrebound: IATA

The strong rebound in interna-tional passenger and cargo demandis continuing, as the airline industryfurther distances itself from lastyear’s downturn and the ash-relatedcancellations earlier this year, ac-cording to the International AirTransport Association (IATA)

Global passenger demand was up11.9 percent year-on-year in June.With capacity increasing onlyslightly in June, passenger load fac-tor was almost at 80 percent, saysthe association.

For passenger demand, carriers inthe Middle East region recorded an18 percent gain in June, followed byAsia-Pacific, Latin America with14.7 percent and North Americawith 10.8 percent. African carriershad the largest increase of 21.3 per-cent, although this figure wasboosted by the World Cup soccermatch in South Africa, says IATA.

“The question is how long canthe industry maintain the double-digit [traffic growth] momentum,”says IATA Director General Gio-vanni Bisignani. He stresses thatwhile there is no indication that therecovery will stall, there could be aslowdown of growth in the monthsahead due to government stimuluspackages winding down and inven-tory restocking being completed.

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News

The conference has always beenhailed as providing an excellent op-portunity for networking. Attendeeslisten to speakers in the morning,while the afternoons are reserved fornetworking. Suppliers have an oppor-tunity to make set appointments withbuyers from throughout the region.

Asked if the region will benefitfrom the World Cup excitement,where four Latin teams made it intothe top 10, Donagaray agrees it willhave an impact. He says much of theworld’s population was unfamiliarwith smaller countries such asUruguay, which placed fourth andParaguay which took 8th place. Theirimpressive showings allowed footballfans worldwide to become more fa-miliar with the countries. “Thesecountries are safe and not very expen-sive and I’m sure we’ll see new visi-tors traveling there,” Says Donagaray.

Asutil has a new, dedicated web-site for its conference (http://confer-encia2010.asutil.org/). You do notneed to be a member of the associa-tion to attend the conference.

World Cupshowing expected todraw tourists

(ADC). It also includes Andrade Gutierrez Constructores from Brazil. Theoriginal contract allowed Quiport to gather fees charged to airport usersboth at the old Quito Airport, which it also manages, and at the new facil-ity during the life of the 35-year concession.

However, both sides were forced to renegotiate the contract, originallysigned in 2002. The Municipality of Quito is now a strategic partner in theproject and will see its revenue increased to US$877 million from US$295million over the life of the contract.

Local media report the pace of construction of the $650 million facility,located 18 km outside of the city, has decreased due to concerns fromlenders after the original contract was frozen.

The renegotiated contract must still be approved by the Ecuadorian gov-ernment. The Latin America Report was unable to get comment from theCanadian firm regarding the new deal.

Meanwhile, the existing Quito airport saw a rise of 9 percent in passen-gers (1.2 million) passing through the airport in the first six months of theyear, over the same period in 2009.

Quito’s new international airport is slated to open in late 2011.

Re-negotiation forced for contract

FROM PAGE 1

FROM PAGE 1

Passenger traffic continues to riseAirports Council International reports worldwide passenger traffic in-

creased 8 percent in June compared to the previous June. In-ternational passenger growth rose more than 10 percent.

As well, the report shows that there was a 6.9 percentjump in passenger traffic in Latin America from 2008 to2010.

However, North America and Europe remain well behindtheir respective 2008 pre-crisis levels whereas the other regions haveemerged stronger, says Andreas Schimm, ACI World Director of Econom-ics.

“Overall, the global industry in the first half was still almost one per-cent down compared to the pre-crisis period due to the significant declinesin the major regions Europe and North America. The impact of the vol-canic ash crisis on Europe’s declining 2010 results further exacerbated theslow return of European international traffic to pre-crisis levels, but it doesnot overshadow the structural change in the markets of the air traffic in-dustry. It is the strong growth in the domestic markets in China and Brazilthat have shifted the balance.”

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Dufry continues to experiencegrowth with double digit profitsfor the first half of 2010.

For the period to June 30, 2010,the Group’s turnover increased by15.8 percent onconstant FX rates,of which organicgrowth accountedfor 10.2 percentagepoints. EBITDAgrew by 20.3 per-cent on constantFX rates and re-ported net earningsalmost doubled toCHF (SwissFrancs) 60.7 mil-lion (US$58 mil-lion).

The South Amer-ica operation increased itsturnover by 35.8 percent to CHF326 million (US$314 million) inthe first half of 2010 from CHF240.1 million in the same periodlast year. Brazil continued itsstrong performance as Dufry hasimplemented several initiativesaimed to increase spend per pas-senger including innovative pro-motions and sales incentivesprograms.

Julian Diaz, CEO of Dufry

Group, commented: “During thefirst six months of 2010, Dufryhas improved its performance andachieved solid organic growth de-spite the economic environment

not having fully recovered yet andspecific events, such the volcanoash cloud, impacting our industry.

Dufry outpaced the passengergrowth significantly, and achieveddouble digit growth on spend perpassenger and average ticketacross the Group thanks to thefurther development of our execu-tion capabilities, which we haveenhanced through the ‘Dufry plusOne’ and ‘One Dufry’ initiatives.At the same time, we were able to

further expand our gross marginas part of our consistent improve-ments in the past, as well as thenew initiatives started since thebeginning of the year.

We intend tocontinue with ourprofitable growthstrategy and on topof the new opera-tions added duringthe first half, wewill enrich our con-cession portfoliowith new retailspace to be openedduring the secondhalf of 2010.

Nevertheless weare alert in respectto the uncertainties

related to the global economic de-velopment but we remain opti-mistic because the travel retailindustry has showed its resilienceagain. During the first half of2010, we have seen good passen-ger growth and an increase inspend.’’

Dufry simplified the structureof its company by merging DufryHoldings & Investments AG withDufry South America earlier thisyear.

News

Dufry growth in double digits

‘We intend to continue withour profitable growth strategy

and on top of the new operations added during the

first half, we will enrich ourconcession portfolio with new

retail space to be opened during the second half

of 2010.’Julian Diaz

CEODufry Group

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News

New Directornamed

The Latin America Report hasnamed a new Director of Market-ing.

Pavlisko has more than 25 yearsof marketing experience. She hasalso had several stories published invarious media, ranging fromlifestyle to fashion.

“I’m extremely thrilled aboutjoining this exciting and growingonline magazine,” says Pavlisko.“The travel retail industry is veryunique and I look forward to meet-ing the wonderful people I’ve al-ready had communication with.”

The Latin America Report editorWendy Gallagher adds, “The addi-tion of Karen to our team has al-ready proven to be a success. Hermarketing experience will be ofgreat benefit to the publication andto our clients.”

Karen can be contacted atkaren@thelatinamericareport.com

Karen Pavlisko

Robertshawleaves travel retail

Ian Robertshaw, Nestlé Interna-tional Travel Retail (NITR) Head ofSales, will take up a new rolewithin the company as Tesco Inter-national Category DevelopmentController.

“I have really enjoyed my timein Travel Retail and have madesome great friends and colleagues,”says Robertshaw.

His successor, Roland Stieger, iscurrently Business Executive Man-ager - Dairy and Creamers Divisionin Indochina Region. He will be lo-cating back to Switzerland fromBangkok.

Ewing replacesHumphreys

Jane Ewing has been appointedmanaging director of Diageo’sGlobal Travel and Middle East(GTME) hub, in succession to PhilHumphreys.

Humphreys is taking on a seniorrole with Coca Cola in Dubai, afterfive years with Diageo.

Diageo International PresidentStuart Fletcher says: “In her 18years with Diageo, Jane has provenher ability to lead large, complexbusinesses to deliver great perform-ance, through her commitment tocustomers, consumers and growingherself and her people. Ewingcomments, “I am delighted to betaking over as managing director ofGTME, particularly at such an ex-citing time for the business. Ian Robertshaw

Jane Ewing

Book your advertising space now for our pre-Cannes issue.

We have fantastic rates to fit every budget.

karen@thelatinamericareport.com

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November 14–17, 2010

Sheraton on the Falls Hotel

Join the

25th Anniversary

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Products

Dewar’s

Dewar’s Blended Scotch Whiskyhas launched a package re-design.The new bottle design provides awindow into the liquid inside.

Zoobug

Children’s eyewear specialistZoobug launches a kids’ sporty sun-glass range. Conceived for the runup to London 2012, this range forkids will be exclusive to travel re-tail and will be designed to embodythe spirit of the Olympic Games inLondon.

Polaroid

Polaroid Eyewear will exhibit atTFWA World Exhibition for thefirst time this year. The decisionmarks the culmination of a highlysuccessful year for Polaroid’s travelretail division, set up at the begin-ning of the year in order to buildsales and distribution in this marketsector, says the company.

Russ Berrie

Russ Berrie offers a new range oflicensed Harley-Davidson® giftitems for travel retail.

The initial range will focus onmugs of different shapes and sizesfrom small ‘shots’ to breakfast cof-fee bowls, all featuring the classicBar and Shield logo for whichHarley-Davidson is well known. Arange of coasters will also be of-fered.

New wine groupfor Pernod Ricard

Pernod Ricard has announced thecreation of a new brand companycalled Premium Wine Brands.

The new company will overseethe development and global strat-egy of the group’s strategic winebrands. The portfolio includes: Aus-tralian wines (Jacob’s Creek), NewZealand wines (Montana and Bran-cott), as well as Spanish and Argen-tinean wine brands withinternational potential (CampoViejo and Graffigna). The newcompany’s objective is to acceleratethe international development ofthese brands within the Pernod Ri-card distribution network.

Arzy Style

Uruguayan designer Adda Ro-driguez launches her latest collec-tion Emma, handmade macraméscarves.

Handcrafted with 100 percentMerino wool, the shawls are avail-able in more than 10 colours.

All scarves made by Arzy Styleare one-of-a-kind.

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A look back at IAADFS Duty Free Show of the Americas

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A look back at IAADFS Duty Free Show of the Americas

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A look back at IAADFS Duty Free Show of the Americas

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A look back at IAADFS Duty Free Show of the Americas

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