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Travel retail to bounce back in 2023


SINGAPORE, 24 February 2023: ForwardKeys’ latest air ticketing data reflects a better year for travel retailers and airports as post-covid consumer preferences shift up a gear to the luxury sector.

Despite the economic slowdown, business travel continues. As airlines and airports scramble to rebuild air connectivity with Asia, some Eastern European airports have positioned themselves as credible gateways to Europe and North America.

Business travel shows resilience in 2023

Despite the economic slowdown, business travel is on an upward trend. This is great news for travel retailers, duty-free operators, and brands. Business travellers are a crucial audience for airport luxury goods.

Intraregional Europe business travel came back in 2022, and now it is time for APAC business travel to recover fully.

Business travel from Japan is stronger than its leisure equivalent. Europe is attracting the business crowd from Japan through Frankfurt, Paris, London and Istanbul. Istanbul Airport is in a strong position in this market, up 13% in Q1 of 2023. More than 90% of those tickets booked are for transfers to Italy, Germany, France, and Spain.

“What is aiding this hot trend are two things. Seat Capacity is above 74% of the 2019 levels and the lower fares cost when compared to flights from Japan to Germany or France,” says ForwardKeys VP Insights Olivier Ponti.

With travel restrictions now eased in China and Southeast Asia, new opportunities have opened. According to bookings for travel in Q1, the share of single Chinese travellers travelling abroad has increased from 25% in 2019 to 40%, and the share of passengers flying in premium class has increased from 10% to 17%.

Changing airport gateways per source market

Returning to pre-pandemic levels, or even growing, does not mean getting back to the situation as it was in 2019. Traveller behaviours have changed, and global air connectivity is very different, as can be seen with the examples of travel from the US to Europe and outbound travel from India.

In Q1, US travellers are flying and increasing the number of travellers to Lisbon (+106% vs 2019), Copenhagen (+68%) and Istanbul (+62%). Moreover, they are staying longer and increasingly taking multi-destination holidays. The top destination pairs from the US remain the UK & France, and France & Italy, but new pairs are emerging, like Denmark & Sweden (+127%), Portugal & Spain (+116%) and Turkey & Greece, +32%.

As India’s long-haul travel resumes, residents dare to test new itineraries. For example, the new air connectivity between India and Warsaw Airport means that Warsaw Airport has witnessed an unprecedented triple-digit growth versus the pre-pandemic period from Indian travellers heading towards the US or key destinations in Europe.

More good news for duty-free and travel retailers

A simple reason why 2023 has the potential to be a decisive profit-making year for airport retailers and brands is that people spend more time at the airports when they transfer. The share of short transfers (meaning less than two hours) has decreased from 44% in 2019 to 37% in 2023. This means travellers have more time to shop now that airport operations are running more smoothly. Besides, many also tend to plan more time at the airport before departure to avoid bad surprises.

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