Special CiR Report: Chinese duty free opportunity in Canada greater than ever

All data based on HY 2017 vs the same period in 2016

 

Preliminary data based on CiR’s 550 airport locations suggests that global total PAX grew +7.3% in the first 6 months of this year. The Americas region grew +3.8%, driven largely by strong gains across Central America, with North America slipping just under the global average at +3.5%, says the study.

Canadian airports, however, enjoyed a buoyant first half of the year, with totalPAX up +6.5%, driven by the international market. Based on data from the 11 airports in the GTS database (which covers 98% of scheduled international flights departing the country) Canadian airports handled almost 2.7 million additional international passengers (including transborder PAX) in the first 6 months of 2017 to reach 33.3 million, at a growth rate of +8.3%.

Breaking this number down, international PAX grew by 1.9m PAX to reach 19.4m (+11.0%) and Transborder (U.S.) PAX grew by 0.8m to reach 14.0m (+5.9%). International and transborder PAX growth was driven by the country’s top 3 airports, which combined to account for almost 90% of international departures and arrivals, and all grew by circa +10%.

Key to the recent growth in international PAX has been arrivals from APAC, China in particular – the Chinese are now the 4th largest nationality arriving in Canada on scheduled international flights, growing +39% in HY 2017.

Ideally located on the west coast, Vancouver is best placed geographically to benefit from the increase in Chinese arrivals. Vancouver currently accounts for 58% of Chinese air arrivals into Canada and is growing +32% YoY (HY 2017).

Microsoft Word - TFWA Canada chart_TMI_310817- lpVancouver welcomes flights from 8 different Chinese cities year-round, the 2nd highest number in the Americas region, behind only LAX. Toronto accounts for a further 32% of Chinese arrivals (+33%) and Montreal accounts for 8% with Calgary bringing in another 2%.

Despite a surge last year, Canada’s currency is relatively good value for Chinese visitors compared to the years prior to 2014, while a new air services agreement in December 2015 increased the numbers of cities Canadian and Chinese airlines can serve from 12 to 18 in the other’s territory.

New routes between China and Canada There are now 18 routes between China and Canada, compared to just 11 at the start of 2016, with 14 airport pairings, operated by 8 airlines (7 Chinese and Air Canada).

These new direct services and Canada’s reputation as a safe travel destination should continue to 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, which would mark a +30% year-on yearincrease.

Low-cost carrier WestJet, which is Canada’s second largest airline, has alsoapplied for designation to serve China which could open up a new demographic segment from the PRC for DF&TR operators in Canada to target. However, it is only at the beginning of the process of approval with Transport Canada and doesn’t yet know when the service would start or which destinations would be served.

Such expansions into the Chinese market align with the Canadian government’s goal of doubling the number of inbound arrivals from China to Canada by 2025.

In September 2016, it was announced that 2018 would be the year of Canada-China tourism. The designation should boost cultural exchanges and the two-way flow of tourists. Both countries are working on tourism promotion activities in Canadaand China, such as the Canada ChinaInternational Film Festival in Montréal.

Canada pledged to simplify its visa application process for Chinese citizens, and an agreement was reached that authorized Canada to open seven additional visa application centers in China to help serve the growing number of Chinese tourists who are crossing the Pacific to explore Canada from Tier 2 and 3 cities.

 

Key Travel Retailers

Dufry (trading locally as Nuance and WDFG) operates concessions at Canada’s key international airports such as Toronto and Vancouver, as well as Calgary, and is the country’s leading retailer for exposure to Chinese PAX.

Under its fascia The Loop, ARI holds a key concession at Montréal’s Pierre Elliott Trudeau International Airport. The retailer also has a couple of smaller locations (Halifax Stanfield and Winnipeg), as well as recently gaining the concession at Québec City Jean Lesage (commencingDecember 2017). However, there are currently no direct links between China and these three airports.

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