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Chinese duty free opportunity in Canada greater than ever

Chinese growth at Canadian airports is easily outstripping other nationalities to create a major opportunity for duty free and travel retailers in the market, according to travel retail analyst, research and category expert, Counter Intelligence Retail.

New data shows that the Chinese are the seventh largest international nationality departing from Canadian airports, and their growth rate has been high at +41% in the 12 months to April 2017. This makes the Chinese the 2nd fastest-growing among Canada’s top 10 international travelling nationalities in the period (see table below).

Of these top nationalities, Japan was the only other Asia Pacific nation in growth up by +29%. These two Asia Pacific nations combined generated departing traffic of almost 500,000 PAX, which would put them in fourth place ahead of Cuba, and just behind Mexico. 

Top Nationalities Departing Canadian Airports - Scheduled Int'l Departures - Excl. Canadian - 12 Months to Apr 2017

“This Asia Pacific spurt is something that DF&TR operators can really capitalise on especially when it comes to the Chinese and Japanese who are known to be good spenders in duty free,” says Garry Stasiulevicuis, President of Counter Intelligence Retail. “Players like Dufry and Aer Rianta International are in a strong position to make easy gains from the continuing strength of the air travel market in Canada.”

Based on scheduled international departing traffic data from CiR’s forecasting tool, Business Lounge, the analyst says Dufry has exposure to 78% of all departing passengers in Canada while ARI has 21% (see chart below).  

Duty Free Retailer Exposure - Scheduled Int'l Departures - 12 Months to Apr 2017

“With concessions at Canada’s key international airports such as Toronto and Vancouver, as well as Calgary, Dufry (trading as Nuance and WDFG) is the country’s leading retailer, with the lion’s share of the market,” says Stasiulevicuis. “Meanwhile, under its fascia The Loop, ARI holds a key concession at Montréal’s Pierre Elliott Trudeau International Airport, and two smaller locations, as well as recently gaining the concession as Québec City Jean Lesage International Airport (commencing December 2017). As such, one in five departing international passengers is exposed to ARI’s retail offer.”

The immense opportunities in the buoyant Canadian market are illustrated by airport duty free growth this year. Figures from the Canada Border Services Agency for the five months to May 2017 show an airport duty free sales rise of +11.5% to CAD175m/$138m.  

“Despite a surge last year, Canada’s currency is relatively good value compared to the years prior to 2014, while a new air services agreement in December 2016 increased the numbers of cities Canadian and Chinese airlines can serve from 12 to 18,” notes Stasiulevicuis. “These new direct services and Canada’s reputation as a safe travel destination should drive more international arrivals from Asia this year.”

The latest route, Air Canada’s Montreal-Shanghai service, was launched in February and Tourisme Montréal expects 110,000 Chinese tourists in 2017 as a result, marking a +30% year-on-year increase. Low-cost carrier, WestJet, which is Canada’s second largest airline, has also applied for designation to serve China which could open up a new demographic segment from the PRC for DF&TR operators in Canada to target.

For further information, please visit Counter Intelligence Retail

NB. PAX Source: CiR Business Lounge | Advanced Analytics Tool - Data based on Scheduled departing international passengers only. Data displayed for nationalities is based on residency through place of ticket purchase