Slide 1 - French Connect The 7th French Aviation Forum

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					Working together Airports, Airlines and Retailers – Key retail issues that need a unified approach
Frank O’Connell President, ETRC French Connect 24 April 2009

Three key issues 2009
One cabin bag rule - Impact on airside retail sales Espace Voyageur - an ETRC initiative to protect travel retail from unnecessary regulation World Health Organisation - Proposed ban on all duty free tobacco sales to international travellers

Single Cabin Bag Rule
New one cabin bag only rule imposed January 2009 including airside purchases Passengers to pay €30 fine or denied boarding at gate. Ground handling companies (and some airports) receiving €10 commission for all fines collected at gate The single item of cabin luggage rule strictly enforced at some airports but not at others Setting precedent for other airlines – though none have officially followed suit so far Retail sales have fallen at airports where rules are enforced strictly.

Single Cabin Bag Rule
Problem stems from on-line check in, coupled with ever increasing charge per checked in bag – Charging for bags now common and growing practice Bag charges will increase - therefore more passengers will try to avoid check-in. Hand luggage problem will only get worse Airports need to take proactive steps with airline partners to solve overall hand luggage issue – otherwise retail sales could suffer Travel retail not the problem – but could be the victim. We need to take the initiative before practice becomes wide spread

Single Cabin Bag Rule

ETRC proposes a joint initiative bringing together FARE, ELFAA, ACI and other industry bodies to work out a framework to address baggage issue and protect future of airside retail.

Espace Voyageur – A new European regulatory regime for travel retail
Espace Voyageur adopted by the French Government Code Commercial 2005 recognises the unique nature of airside retailing

Acknowledged that airside trading is a specifically designated area; a separate marketplace to the high street that competes with other international airports
Different trading conditions apply; access to travellers only with valid travel documents, 24/7 opening, multilanguage environment, age controlled environment

The need for Espace Voyageur
Multiple requirements for labelling and health and nutritional information on food / beverage products – Could force manufacturers not to supply certain airport markets
National display / merchandising restrictions being proposed on liquor and tobacco products. Rules are constructed for the domestic market but can dramatically affect travel retail

Espace Voyageur
ETRC objective– to establish an EU regulatory regime recognising travel retail as a unique market Progress so far; 2008 Food Labelling Regulation – exemption accepted by Commission and EP for supplies to EU duty free / travel retail market from national language requirements / mandatory f.o.p labelling Target: principle to be accepted by end-2009 with regulatory framework to follow within 3 years Cross-industry support vital if we are to achieve this aim

Illicit Trade Protocol – WHO & Duty Free Tobacco
In 2007, WHO set up an Intergovernmental Negotiating Body (INB) to develop protocol on eliminating the illicit trade in tobacco products Principle objectives are to control the supply chain, tracking and tracing, policing and enforcement measures

INB meeting in October 2008, tobacco control activists lobbied for the prohibition of all duty free tobacco sales alleging sales contribute to illicit trade

Illicit Trade Protocol – WHO & Duty Free Tobacco
A number of proposals tabled by delegations at INB2 calling for a complete ban on all duty free tobacco sales were supported by countries in the WHO from the S. E. Asia and Middle East regions A serious new threat but there is time to take action to limit the challenge to duty free sales in this protocol before it is finally adopted

Urgent lobbying action needed
The draft text for consideration at INB3 is currently being developed and will be circulated shortly. A proposal to ban all duty free tobacco sales will be forthcoming in the weeks ahead

Before the next meeting, countries will be expected to arrange consultations at a national level to develop their positions on the draft text for discussion at INB3

Urgent lobbying action needed
The duty free ban was only tabled during the October 2008 negotiations in Geneva and many delegations would not have had a mandate to agree to proposals for a duty free ban. Airports, airlines and retailers must urgently lobby governments to sensitise them to this development as many ministries / departments will not even be aware that such proposals are under discussion

Key arguments
Airport duty free is amongst the most controlled retail environments Airports, shop operators and airlines involved in selling duty free tobacco are amongst the finest and most reputable companies in the world To accuse such companies of involvement in criminal activity is ridiculous and does not deserve consideration If there are grounds for such allegations in certain countries, this is a matter for the national regulatory authorities and is not a justification for a global ban on duty free tobacco sales

One bag rule – Industry needs to accept that the airline revenue model has changed and take steps to ensure protection of airside revenues Espace Voyageur – An extension of the French system will bring many benefits to all European airports WHO proposal to ban duty free tobacco – Urgently requires immediate political action from all

Questions or Comments

Thank you

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