In the fast-growing world of airline onboard shopping, South Africa-based Tourvest is one of the top three operators of inflight retail.
Airlines are constantly struggling to generate revenue while competition forces them to drive down ticket prices. One way they do this is through inflight retail sales.
The airline onboard retail industry has been growing annually at an average rate of 12.9 percent since 2012, with $5 billion-plus in sales in 2014, travel intelligence company GuestLogix reported in December.
Much of that growth was led by passengers buying food, beverages, inflight entertainment, duty free and travel retail products onboard.
Rated among the top three inflight retail operators in the world, Tourvest has an annual turnover in excess of $160 million, TravelRetailBusiness reported.
Tourvest recently won a contract to operate the inflight duty free program and provide technical expertise to Ethiopian Airlines, Africa’s fastest growing and most profitable airline.
The company already does business in key African markets including South African Airways, Kenya Airways and TAAG (Angola), plus international routes operating elsewhere in the world.
Strategically it is well positioned in the distribution of inflight duty free product on the African continent, given its experience, said Tourvest CEO Clive Jones.
The latest win for Tourvest is a prestigious one, considering Ethiopian Airlines’ reputation in Africa and beyond, Jones said.
Ethiopian Airlines has 76 aircraft in operation with another 42 on order, delivering a service to over 7 million passengers a year in 92 international destinations and five continents.
Tourvest operates businesses ranging from travel management companies and souvenir shops to foreign exchange bureaus. Targeting diverse customer segments is part of the company’s strategy. That way, it’s less devastating when, for example, government travel cutbacks are targeted by countries imposing austerity measures.
The South African Treasury in March introduced new measures to contain costs that concern the travel industry, Moneyweb reported.
Tourvest invested significantly in technology to help the South African government save money, according to Claude Vankeirsbilck, chief sales and marketing officer of Tourvest Travel Services.
Government travel spending is a significant portion of business travel in South Africa and any measure to reduce it will have an impact on profits and jobs in the industry, Vankeirsbilck said.
To maximize commercial opportunities, Tourvest says it aims to build equity in multiple brands. While growing its Southern African businesses, Tourvest is expanding its offshore exposure to reduce reliance on a single market and currency. This led to the growth of its inflight duty-free operation which was recently awarded the British Airways global concession for inflight retail, as well as Vueling, the largest low-cost carrier in Southern Europe based in Barcelona.
Full-service carriers account for roughly 60 percent of sales growth in airline onboard retail since 2012, but sales for low-cost carriers are growing at nearly double the rate of full service carriers, according to the GuestLogix Airline Onboard Retail Market Assessment 2015.
“An evolving retailing sophistication, combined with passengers’ willingness to pay for a better travel experience, contributed to significant inflight retail market growth,” said Dan Thompson, a spokesman for GuestLogix. “Global airlines have achieved substantial revenue growth from onboard retail activities, primarily through the sale of food and beverage and duty free. In 2016, we’re going to see onboard technology, product and service offerings, access points and payment methods continue to evolve and expand.”
Expanded payment options will give passengers more choices in the Tourvest-Ethiopian Airlines partnership, said Tewolde Gebremariam, Ethiopian group CEO.
“This cooperation with Tourvest will help us to widen the choices of our Sky Duty Free retail with the best-in-class product varieties and with new services like pre-flight E-commerce orders through our website and with more convenient forms of payment in cash – or various credit cards delivered by their TourPOS (Tourvest Point of Sale) inflight tablet device,” Gebremariam said.
In addition to serving 50 million customers on 300 routes, Tourvest also does training and support for the 28,000 inflight crew members in its client base. It handles end-to-end software and hardware solutions, warehouse management software and tablet-based point-of-sale devices.
Tobacco, wine and spirits, and fragrances and cosmetics account for 70 percent of inflight duty free and travel retail sales. However, onboard buying trends differ by region. For example tobacco, wine and spirits are a larger percentage of overall sales in Africa, Europe and the Middle East (44 percent) compared to Asia Pacific (12 percent).
The onboard retail market remains strong and will continue to serve as a major area of growth and focus for airlines worldwide, according to the GuestLogix report.
