In recent weeks, Hong Kong Airlines has been forced to issue two official statements regarding its long-term future amid rumours it was to apply for liquidation.
But much like the airline’s day to day aviation business, it has been a case of business as usual for the onboard duty free programme, which is run in partnership with 3Sixty.
On 21 December 2018, the airline issue a statement seen by TRBusiness indicating changes to its board of directors would not impact its business and operations. The statement read: “Hong Kong Airlines values the good relationship we have with our service providers and communicated regularly with them to address outstanding issues.
“Once again, Hong Kong Airlines is proud to be one of Hong Kong’s home carriers. We are here to stay and remain committed to sustaining our long-term growth.”
As rumours persisted, the carrier was forced to issue another statement on 5 January 2019, which said: “We deplore the untrue and groundless speculation about Hong Kong Airlines ceasing operation and applying for liquidation. We reserve the right to take legal action against those who deliberately create these rumors.
“The company has been and is continuing to operate as normal. We remain committed to offering our best service to customers who have chosen to support and fly with us.”
Regarding the duty free business, Hong Kong Airlines and 3Sixty have been working in tandem since 2014 and the combination appears to be growing from strength to strength.
In an interview with TRBusiness published last June, Qin Peng (left), who has since been promoted to the role Service Delivery Department, Deputy General Manager, Inflight Products and Operations, said sales in 2017 increased +20% compared to the previous year. He also indicated pre-order and home-delivery remained significant focuses.
Speaking once again to TRBusiness in Hong Kong towards the end of 2018, Peng said: “We are seeing a significant increase compared to last. Sales between January and August, compared to the same period in 2017 rose +38% or even +40%.”
Peng, who did, however, report a decrease in sales from September 2018 onwards due to out of stock issues, attributed a generally positive overall sales picture to product portfolio adjustments and crew engagement. He commented: “Crew engagement in the form of e-training and face-to-face training and the adjustment of our promotional strategy have both driven sales.”
Currently, the Chinese are the airline’s top-selling duty free customers with a particular eye for beauty — gifts, watches, gadgets, tobacco and jewellery also form part of the assortment — but this wasn’t always the case. “In previous years, it was a mixture of passengers contributing to total revenue. Now, it is more free independent travellers and frequent flyers. We have adjusted our assortment accordingly.”
On the product front, beauty products, as mentioned, are strong sellers, particularly among women. “We continue to find new beauty products. High-end items are also maintaining stable sales.”
Sales of gadgets are increasing, particularly among men and the younger generation. “We can still do more for the male market”, acknowledged Peng. “Now, more and more men want to buy for themselves. Women also want to purchase for their husbands or boyfriends. It certainly seems there are more products available for men.”
Moving forward, Hong Kong Airlines, together with 3Sixty, is planning to revamp its Sky Shop website as it continues to focus on cross-border e-commerce ‘especially for China’.
“Consumers can order inflight or online. Once payment has been processed, we can deliver products to Hong Kong and China.”
Items can also be pre-ordered 24 or 48 hours before flights and delivered on board. “The proportion of home-delivery and pre-order in terms of overall sales is increasing year after year”, emphasised Peng, “but revenue generated from home-delivery is higher than pre-order.”
The need for data-sharing between all parties including airlines, concessionaire and brands is vital. “We exchange sales data and do analysis, but there is plenty of work to be done on this front. We are learning in this field.”
Peng added: “In the future, we want more connection with frequent-flyer programmes and more alliances with e-commerce companies with the aim of exchanging logistical information.”
Last year at a dedicated inflight workshop in Cannes, TFWA MD John Rimmer revealed the inflight duty free market had returned to growth for the first time in four years. Pressed by TRBusiness on the current state of the inflight duty free market, Peng suggests retail performance across Asia Pacific carriers is driving the global inflight retail market. “Many people believe inflight sales have declined over the years, which is true in some instances. Sales in Asia Pacific, however, are still increasing.”
With growth in international air travel across Asia Pacific unsurprisingly outstripping its regional counterparts in 2018, the future of the Asia Pacific inflight duty free market remains bright.
More support from certain brands, however, would certainly be helpful, implies Peng. “The big brands tend to always support airport and downtown duty free and then inflight, which is the second or third priority.
“Obviously, we want more support from the brands, but on our side, we have an opportunity to focus more on home-delivery and must work on finding better solutions and collaborations with the brands we do currently work with on stock issues.”