AUSTRALIA/NEW ZEALAND. Ivo Favotto, a Sydney-based executive and company owner who has worked for all three stakeholders in the Trinity chain, presents his latest commentary and figures on the gradual re-emergence of airport commercial activities in Australia and New Zealand. Favotto owns and runs The Mercurius Group a consultancy focused on industry research, consultancy and benchmarking studies, as well as operating his own destination merchandise supply business. This month, he warns that the present zero-risk mentality of both governments means little hope of any significant near-term acceleration of recovery.
Notwithstanding growing optimism – excitement even – in the general community about the arrival of the Pfizer COVID-19 vaccine and the start of the roll-out across Australia and New Zealand, the number of travel retail outlets open across the two countries fell in February 2021 for the second consecutive month – belying the broader optimism.
February 2021 represents the 11th month of The Mercurius Group’s monthly reports on travel retail’s recovery (or otherwise) from the COVID-19 crisis in Australia and New Zealand. The analysis records the re-opening of 822 travel retail stores across the 27 airports with more than 0.5 million passengers across both countries. As of February 2021, just 50% of the 2019 number of travel retail outlets are open.
The peak point in the travel retail recovery was in December 2020 when 56% of outlets were open. At that point, optimism abounded that COVID-19 had been contained with the end of Melbourne’s 111-day lockdown.
“Okay campers, rise and shine, and don’t forget your booties cause it’s cold out there… it’s cold out there every day” – Phil Connors (Bill Murray), Groundhog Day
Since then, however, a series of lightning shutdowns in response to relatively small COVID-19 spikes across multiple states in Australia and Auckland in New Zealand has once again eroded public confidence in travel and hence more outlets have closed. Moreover, we are now starting to see closed outlets converting into vacant sites.
The off-again, on-again closure of borders is starting to have a familiar feel – much like Phil Connors, the weatherman in the 1993 movie classic Groundhog Day, who was forever stuck in a time loop and kept experiencing the same day over and over.
As the anniversary of COVID-19’s impact on travel and travel retail approaches, impatience for getting ‘back-to-normal’ has been eroded into a more pragmatic acceptance that the free return of travel will be a slow and bumpy road taking most of 2021 (at least). That realisation is driven by the ultra-conservatism of both the Australian and New Zealand governments in managing their exposure to COVID19.
The continuing rolling snap lockdowns – with three unrelated regional lockdowns during the month – have dampened traveller’ enthusiasm to book trips and brave the possibility of being placed into 14 days of unplanned and self-funded quarantine. Qantas – Australia’s largest airline – has subsequently reduced its capacity for first three months of 2021 to around 60% of capacity (seats not travellers), down from around 80% planned in December 2020 prior to the flurry of border closures.
Permanent store closures are now starting to mount up as some retailers see the sector as too risky, preferring to sit out the wait for a recovery or, where they can, simply retreat until there is more certainty
International borders in both countries remain resolutely closed until at least June 2021 and there really is not any publicly released road map that sees them re-opened, even with the vaccine rollout now underway.
Filling the void, the travel industry is trying to take the lead with Sydney Airport, Auckland Airport, airlines and the various airport and airline and travel associations all trying to sell their own versions of a road map. Most proposals attempt to align easing international border restrictions to both local and overseas vaccination programmes, typically commencing from October 2021. There may also be specific travel bubbles established, but even the travel bubble between the relatively COVID-19 free nations of Australia and New Zealand has been on-again, off-again. It may be quite some time before any material increase in international passenger numbers occurs.
On a positive note, the travel retail industry is broadly citing passenger spend rates (PSRs) are…