FAST RETAIL EXPANSION

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1 A resurgence in international passenger traffic is helping Russia s Aeroflot-owned Aeromar ervices company generate around R30m roubles ($525,867) a month from its airline supply operations, according to Aeromar Ceo Vladimar Dzhao speaking at last week s exclusive KYERVICE 2017 Forum in Moscow which attracted more than 40 international airlines. Talking separately to usiness at the event, Dzhao said: We have a huge turnover of around R30m roubles a month and this is very profitable and useful for the airline. I He also confirmed that Aeromar is planning to expand its onboard retail and food and beverages services to many more third-party Russian airlines in future. [Aeroflot already operates 170 aircraft, as it also plans to add another 40 flights this summer-ed]. (Above, from left to right: Alexander eradko, Head of the Federal Air Transport Agency; Valery Okulov, Deputy Minister of Transport of Russian Federation; Vitaly aveliev, CEO and PJC Aeroflot Chairman; and Vladimir Dzhao, Aeromar Ceo. Click to enlarge. FAT RETAIL EXPAIO As part of this, Dzhao said that Aeromar the Russian Federation s largest catering company which is now celebrating its 25th anniversary will now be providing its duty free, catering and cleaning services to no less than 400 flights every 24 hours from its airport bases throughout Russia. Dzhao also confirmed that the airline is now transferring its system technologies into a custom-built specially designed digital format AP system, created specifically for the airline and constructed entirely around the passenger s needs.

2 POKE DTY FREE OFFER This is expected to benefit the airline and Aeroflot s sister airlines, as well as the Inflight ales Group (IG), which is currently the onboard duty free concessionaire working with the airline. Asked for his assessment of IG s operation at the recent KYERVICE Conference event where usiness was a leading speaker on day two, Dzhao said unequivocally: IG is the best. They were the easy choice and he added they were also by far the best concessionaire in the airline s last evaluation process. In addition to Dzhao s comments on overall Aeromar sales turnover, Karen DurbanVilleval, the Inflight ales Group s Director of Europe & Africa added that Aeroflot alone generated 2m ($2.1m) from its duty free programme in March, representing a 50% increase in sales turnover over the same month a year ago. I ADDITIOAL AL COITIO Aeroflot has one of the very youngest aircraft fleets in the world of commercial aviation, with an average aircraft age of only 4.2 years. At the same time, Aeroflot-owned sister carrier Rossiya (based in Moscow Vnukovo Airport and aint-petersburg) generated a further 3m ($3m) last year and Aurora Aeroflot s regional airline based in Vladivostock, Yuzhno-akhalinsk and Khabarovk which serves the Far Eastern regions and iberia generated another 1m ($1m). Durban-Villeval said these latest sales turnover and increased spending levels are extremely encouraging, considering the last couple of years sanctions and terrorism incidents [in Egypt mainly]. Rossiya Airlines which is part of the Aeroflot Group. Click to enlarge. (Photo credit Anna Zvereva).

3 These have understandably seen Russians drastically reduce the amount of foreign travel in these favoured destinations as they vacation at home instead. Few could have failed to note the lack of traditional high-spending Russian travellers in key airport markets such as Turkey, Egypt and within many Russian airports themselves. RIA RECOVERY I DERWAY However, this is all changing now, just as key ground shop airport retailers such as Dufry are also reporting much-improved sales results to Russians over the last six months in particular. tate-introduced travel restrictions on Russian nationals are also loosening, as these travellers begin to travel overseas in much greater numbers than before. For example, passenger numbers at Moscow s three main airports of Domodedovo, heremetyevo and Vnukovo rose by 16.4% to just over 6m last March and February, according to Russia s Federal Air Transport Agency. I This saw heremetyevo handle 1.558m international passengers (+16.7%) in March and Vnukvo process 292,000 international passengers in February the last month under review. y contrast, Domodedovo handled just over 2m passengers last March, although it does not break down its domestic and international split. Karen Durban-Villeval, the Inflight ales Group s Director of Europe & Africa who manages the Russian business. Click to enlarge. The Aeromar Aeroflot ky hop January 2017 edition. IG/AEROMAR IG PERFORMACE-AED COACT

4 This much improved trading environment has also led to the Inflight ales Group agreeing a new contract with Aeromar for the Aeroflot duty free business, according to Karen Durban-Villeval. he says that this time around the concession is based on the number of purchases made by the airline s passengers and as such, it is performance related. he said: It is a new concept and I think it can be a long-term contract with them and it is very good. I think they are quite happy with what we have been doing in Russia. It is getting more and more complex to export goods to Russia because we do it from Paris, so I think that they know that the logistics expertise that we have developed is now something that they need. DTY FREE ARRIVAL VER IFLIGHT AL Meanwhile, there was also a good deal of interest from the KYERVICE 2017 Forum conference in how the potential introduction of duty free arrivals shops might impact on inflight duty free sales if these allowances are given the go ahead this year. This follows last December s new customs code which was signed into existence by the Eurasian Economic nion (EE). I The original timetable for implementation was set between the middle of this year and 2018, with significant publicity afforded to this development at a special workshop at the Cannes TFWA show last year. Doug ewhouse, usiness Editorial Director addressing the KYERVICE COFERECE 2017 in Moscow on the global inflight duty free industry last week. After the presentation, ewhouse answered a series of varied questions from the audience on the duty free airline and airports industry. (Photo credit and thanks to Anna erezhnaya). PREMIM AD EXCLIVE

5 Just how much this might all impact upon inflight duty free sales onboard Russian carriers remains to be seen however and especially considering that Aeroflot and several other carriers no longer sell alcohol onboard. This occurred after too many passengers were found to be opening and drinking their purchases during flights. [This has also become an increasing problem in the K-Ed]. I In the meantime, IG has implemented a quite separate policy of offering many premium quality products in Aeroflot s ky hop that cannot be bought at other duty free shops, particularly in the areas of beauty and skincare.