We recently had the opportunity to have a brief chat with Gordon Hamilton, Senior Vice President of Business Operations at Aviation Strategies International about Airports, planning and travel retail.
The first time I met Gordon Hamilton, he was running an Airports Council International (ACI) training session on airport business development and planning in Istanbul, Turkey. I had decided to take that course in order to better understand the airport’s perspective and commercial requirements.
Gordon is a true airport planning expert and his experience in travel retail spans 30 years, and includes some of the most successful airport commercial developments in the world, including Incheon Phase 1 and 2. He is one of the authors of the 2004 and 2014 International Air Transport Association (IATA)’s Airport Development Reference Manual, and of the Airport Cooperative Research Program Resource Manual for In-Terminal Concessions.
Gordon was kind enough to make himself available so we could ask some questions on the world of airports, planning and travel retail.
Inside the Cask: Gordon, how did you first become interested and involved in airport business development and planning?
My Master’s Degree was focused on airport planning and I subsequently worked for the Canadian Ministry of Transport before entering consulting in 1981. On the commercial side, my company, Sypher, started so work on airport retail in the mid 1980’s and had a team working in that area continuously from then on.
Inside the Cask: How do you find training others on these topics? Is training something you enjoy?
Well, I really love training professionals that care about their work.
At Aviation Strategies, training (we call it competency development) is a key part of what we do. It can be very satisfying to work with small groups that are trying to make the industry better – the interaction is great.
Inside the Cask: Where should we look at for the latest in terms of airport planning and development? Which airports?
With the growth of public-private-partnerships around the world, I expect that airport capital programs in many countries will be more program driven (that is meeting the capacity and level of service requirements) and less about making a national statement. Personally, I would love to see the new Lisbon airport development start as soon as the Portuguese economy is back to full health.
The site at Alcochete is perfect and this could be one of Europe’s great airports and maybe the last big greenfield airport.
Inside the Cask: Gordon, what are the trends that you think will have an impact on travel retail in the next 10 years?
Andre, at the risk of sounding like a doomsayer, some of what I believe is coming at us is a bit challenging, including competition from on-line sales of luxury goods, changing tastes in luxury in some markets and even an declining interest in luxury goods.
On-line sales of luxury goods have grown from essentially zero ten years ago to about 7% of the market today. The 7% level may not sound too scary, but the year over year growth rate in these on-line sales was 40% in 2015 and that should worry people in the travel retail industry. If that rate of growth continues, almost 40% of the luxury goods market will be on-line by 2020. An element of the on-line sales that is also threatening is that as much as 35% of these sales are discounted.
The changing tastes issue is perhaps a little longer term, but as India and China mature, they are developing their own luxury brands, and I anticipate movement towards these brands. In India, three local brands made the 2015 Deloitte top 100 luxury brands list- watch brand Titan and two jewellers – Gitanjali and PC. Chinese luxury couturier Guo Pei is also already selling worldwide.
Declining interest in luxury goods is a Western phenomenon at this point. Millennials are showing less interest in assets and more in experiences. The impact of this is already being felt in North America.
Inside the Cask: So what does this mean for travel retail?
I think it points to two things:
- The need for nimbleness among the retailers to ensure that their mix keeps up with changing tastes and that their prices are competitive; and
- Potentially declining travel retail sales and related revenues for airports. Ultimately, it may put pressure on to reduce the rent levels at airports.
Gordon Hamilton Professional Bio:
Senior Vice President, Business Operations
● President/Managing Director of Sypher and Jacobs Consultancy Canada from 1981 to 2009
● Author of the 2014 IATA Airport Development Reference Manual’s Airport Planning Section
● Has worked on aviation projects in over 50 countries
● Main expertise: airport planning, financing and commercial management