Total sales of duty-free goods worldwide in 1996 - through all distribution channels -  were around US$25 billion, according to the latest annual survey, The Best n' Most in DFS, compiled by Generation Sweden publications. This compared with around US$20.5 billion the previous year, confirming a slowdown in the annual growth of duty free sales over the early - to mid - 1990s.

There were few changes in the rankings of the leading duty-free outlets. The biggest increase was recorded by Paris' Charles de Gaulle airport, up from eleventh position in 1995 to sixth in the 1996 ranking. Tokyo's Narita airport lost five places with a drop of US$100 million in sales, falling to eleventh place. This was especially curious given that Japanese outbound travel had not yet shown any signs of a slowdown in 1996. One can expect a further decline in sales for 1997.

Given last year's slowdown in traffic demand by Koreans, another decline was likely for Seoul's Kimpo airport, which was down to twenty-second position in 1996 from sixteenth the previous year. Bangkok also lost four places in the ranking, falling to twenty-sixth from twenty-second place.

Honolulu maintained its second position after being ousted from the top spot by London's Heathrow airport in 1994. Hong Kong's Kai Tak and Singapore's Changi airports both also held on to their 1995 positions. Manila's N. Aquino International, meanwhile, dropped one place to tenth.
 

Airlines' duty-free sales performance was very mixed in 1996. Thanks to a 17.7 percent increase to US$117.7 million, the leader, Japan Airlines, ousted the Danish charter carrier Premiair from first place in the airline ranking. The only other Asian carrier in the airlines' top 10 sales ranking was China Airlines, in tenth position with US$37.7 million.

Europe accounts for the largest regional share of duty-free sales, although this has slipped over the last few years due to competition from Asia as well as a decline in total sales of tobacco goods. Its share will fall dramatically from July 1999, the date set by the European Commission (EC) for the abolition of duty-free sales within the European Union.

Despite continued pressure from lobby groups  and  even  the  European Parliament to persuade the EC to renege on its plans, there is little chance of a reprieve. The good news for Asia is that many in the industry now believe - incredible as it may seem -  that this will stimulate travel by EU residents to non-member destinations. Asia's share could also be boosted this year by the opening of new airports in Kuala Lumpur and Hong Kong.

Air Transport

Two new watershed routes. From a new market perspective, the first from Pacific Asia into the world's gambling capital, Las Vegas - Northwest Airlines starts Las Vegas - Tokyo this June. And from an operational viewpoint - year-round non stops Chicago - Hong Kong. This is probably the longest nonstop flight in the world at just under 16 hours, and possible year round only thanks to the installation of satellite navigational facilities and improved aircraft engines.

• Nepal's brave new aviation world takes a new turn this autumn, with two of the airline start-ups planning long-haul operations into Europe. Alpine Air is scheduled to inaugurate service to Munich and Rome, and Nepal Airways to Munich only.
• Watch for growth in frequent flyer and guest programmes (FGPs) in Pacific Asia as a result of two unconnected facts - new U.S. / Japan air bilateral and giant hotel mergers.

For the airlines, new flights from the U.S. will he started, even if timing in the current weak market in Asia is bad. This is because competitive pressure in the U.S. is intense, and most airlines believe that any downturn in traffic on the Pacific is temporary. So both codeshare and FFP links in the Pacific region will he strengthened. FFP numbers of U.S. airlines are large. American Airlines says it gave 2.2 million free travel awards in 1997. That indicates a broad industry total of around 10 million freebies.
 

Airports

Airline passenger traffic increased by five percent to 2.6 billion in 1997, according to the global airports' body; Airports Council International (ACI), and cargo traffic was up eight percent to nearly 54 million tonnes. This compared with around six percent growth for both in 1996. North American airports - the largest region - saw an increase of only three per cent in passengers as against seven percent for European airports. Asia Pacific, the third largest region, handled just over 408 million passengers, an increase of five percent. However, this was nearly two percent lower than the growth rate in 1996.

The slower rate is attributed by the ACI to a decline in travel due to the financial turmoil which hit many Asian countries in the second half of last year.  But its figures also show that 12 percent more cargo moved through Asia Pacific airports in the 12 months. The ACI says this could reflect a surge in exports from the region, whose products became cheaper with the decline in the exchange rate of key Asian currencies as a result of the crisis.

� Two developments are occurring in Japan that might have been unthinkable five years ago. Firstly; Osaka's Kansai airport is reaching capacity at certain times of the year and day. As a result, authorities are considering moving some domestic flights to the city's old Itami airport so that Kansai can handle growth in international flights. Secondly; initial proposals have been made to use a military air base near Tokyo for commercial flights if Tokyo's Narita airport is unable to build its badly needed second runway.

� In 1997, Amsterdam Schiphol airport traffic to and from Pacific Asia increased 7.4 percent to 2.4 million passengers. Traffic was boosted by a strong increase on India routes. Traffic to / from Hong Kong stagnated but this followed a sharp rise the previous year.
 
 

Markets and Destinations

Despite the region's current economic turmoil, a new survey from Euromonitor suggests that over one billion Asians will have middle-class spending power by 2000.

� Saudi Arabian tourists spend US$17 billion a year on travel and tourism, according to a study by the kingdom's chamber of trade and commerce - and only 27 percent of the total is spent on tourism inside the kingdom. Destinations wondering how to attract Saudi tourists should know that the country has 50 theme parks and children's fairs for its population of 18 million, of whom about one-third are expatriates.

� First quarter 1998 results for Hong Kong and Singapore are very much as expected. International tourist arrivals in the former British colony totaled 2.2 million, down nearly 25 percent on the same period in 1997. With the exception of Chinese Taipei and mainland China, all major market regions showed a decline in arrivals in March. Meanwhile, tourist arrivals in Singapore in the first quarter fell by nearly 20 percent to 1.5 million. But prospects for both destinations are much better for the second half of the year.

� Some travel patterns are difficult to spot, and this was the case with the luxury Singapore - Bangkok Eastern & Oriental (E&O) train. The first half of 1997, to quote Mr. Tom Evers-Swindell, General Manager of E&O in Singapore, was "a real ripper." But in the second half, bookings began to slow in July, then stopped, and then went backwards as a result of cancellations.

Strangely, Mr. Evers-Swindell believes the loss was partly related to another destination in the region, somewhat removed from Southeast Asia - Hong Kong. He says many long-haul customers who travel on the train were also likely to visit Hong Kong - "and the allure of Hong Kong had gone."

� According to the most recent forecasts from the Asian Development Bank (ADB), China was the fastest growing of the major regional economies in 1997, at 8.8 percent. With forecasts for most countries down for this year and 1999, China is still expected to achieve 7.2 percent gross national product (GNP) growth in 1998, and 6.8 percent in 1999. That would make it the fastest growing economy this year, and the second fastest, after India with seven percent.

Some of China's travel and tourism measures support this growth. International air seats sold increased 15 percent in 1997, international tourist arrivals rose 13 percent, and spending 18 percent. However, domestic travel growth - around 20 percent annually for most of this decade-slowed to under one percent.

Hotels & Attractions

Sales generated by Marriott International's worldwide sales offices grew by 16 percent in 1997 - the ninth consecutive year of double-digit growth. Key to this growth was a surge in electronic bookings, the largest gains in which were recorded by Milan, Mexico City and Sydney. A breakdown of overall performance by individual sales offices indicates that Miami (the group's Latin America sales office) and London achieved the highest growth levels of 22 percent and 21 percent respectively, followed by Sydney (20 percent). The only decline was in Tokyo, down 10 percent.

� A wave of new hotels opened in Hanoi in the last six months have been those run by nascent Asia-based hotel management groups. Interestingly, the next wave will come mainly from international groups.

Newly opened are the 143-room Sunway (run by Malaysia-based AlIson Hotels), the 151-room Guoman (also Malaysia based), the 324-room Horison (part of Hong Kong-based Swiss-Belhotel), and the 322-room Meritus Westlake (part of Singapore's Meritus group). The international players due this year or next are the 299-room Sheraton, 260 room Nikko, 309-room Westin and 286-room Hilton. One independent hotel is also due to come on line the 325-room Lien Westlake.

� Online hotel bookings are forecast to increase from just 2.5 million in Europe and North America in 1997 to 65 million by 2000. That would represent just over seven percent of total hotel bookings in those regions.