Arrival Retails and Duty-free

International airports generate revenue from two main categories: aeronautical and non-aeronautical. The non-aeronautical revenue is sourced from commercial activities such as retail and duty-free, food and beverage, car hire, car parking, and advertising. And others. The retail and duty-free revenue represents a third of the non-aeronautical revenue. Although those commercial activities are common among international airports, there is a variation in providing retail and duty-free services for arrival passengers.

In the past, the practice of providing retail and duty-free shops is limited to the departure terminal. There are various reasons for international airports not providing retail and duty-free shops at the arrival terminal. The first is related to the country’s security (increased smuggling). The second is related to the impact on the country’s economy, especially those countries where VAT is a major component of the national economy. The third is related to passenger behaviour. There is a belief that arrival passengers don’t intend to shop before clearing immigration and customs. The fourth is related to the arrival terminal design. Most of the existing designs of international airports were designed according to the old concept of airport design, which places a huge emphasis on a smooth flow of passengers and ignores arrival passengers’ shopping needs.

Nowadays, more than 45 international airports started retail and duty-free shops at the arrival terminal, which impacted the non-aeronautical revenue positively, according to ICAO. Examples of such international airports include airports in Europe, Latin America, Asia Pacific, Middle east. The European Travel Retail Confederation (ETRC) and Airports Council International (ACI) have indicated the potential advantages of arrivals duty-free to the aviation eco-system. According to James Brass, Partner at York Aviation, the key roles of arrivals shops lie in satisfying passengers’ needs and interests and generating extra commercial revenue streams, which lead to investment and growth of the aviation ecosystem. In fact, Norway’s airports reported the sales of arrival duty-free exceeded the sale of departure duty-free, indicating the revenue stream of retail and duty-free has increased by more than 100%.

The international airports mentioned have realized and obtained the benefits of introducing retail and duty-free shops at the arrival terminal. According to James Brass, there are no smuggling events happening and the fear of interference with the domestic markets by the arrival duty-free is not true. In fact, there is no impact at all.

Introducing retail, and duty-free shops at the arrival terminal presents a huge opportunity to be exploited by the international Saudi Arabian airports. In fact, it is aligned with the vision 2030 stated by Crown Prince Mohammed Bin Salman. GACA & international airports should take a positive step and start discussing such opportunities with the related government agency knowing that digital monitoring for the arrival terminal will enhance the country’s security and the availability of capable designers to redesign the existing arrival terminal to implement arrival retails and duty-free shops concept.