ABU DHABI (ALETIHAD)
Airline passenger traffic is growing again, but travelers’ spending patterns are shifting across regions, product categories, and generations.
Since 2023, passenger traffic has grown at more than double the rate of duty free and travel retail sales, leaving an estimated $5 billion in unrealised sales compared with the level implied by 2019 sales per traveller, according to the new Global Travel Retail Pulse from Oliver Wyman.
The Middle East, however, recorded a $0.6 billion revenue surplus and continues to lead all regions in sales per passenger, despite temporary disruption to passenger growth from geopolitical events.
South America and Africa continue to develop as travel retail markets alongside rising passenger volumes. South America recorded an estimated $0.2 billion in unrealised sales relative to 2019 sales-per-traveller levels, while Africa generated an estimated $0.1 billion above that benchmark.
The study draws on a survey of around 4,000 consumers across Germany, France, the United Kingdom, the United States, Japan, Saudi Arabia, Mainland China, and India, as well as interviews with more than 30 senior industry executives, and finds that retail performance varies widely by region
Asia Pacific, historically the industry’s strongest region, accounts for most of the shortfall, with travel retail sales an estimated $7.6 billion below levels implied in 2019. Several shifts contribute to the regional decline, including the growth of domestic alternatives such as Hainan duty-free, diminishing price advantages, and evolving consumer behaviours.
Europe, by contrast, recorded a $3.1 billion revenue surplus. This growth is supported by airports’ investment in retail, the return of duty-free shopping on UK-EU routes following Brexit, and a favourable mix of long-haul travellers.
Regional trends are also reshaping category performance. Fragrances and cosmetics are among the industry’s top-performing product categories, yet sales were impacted amid the wider shopping slowdown in Asia Pacific. In other regions, however, sales grew 4.5% and remain an important source of growth for the industry.
Gen Z and Millennials already account for 61% of total airline travel spending, a share expected to approach 80% by 2035, and their buying criteria are diverging from those of older generations. About half of Gen Z travellers cite price as a key buying criterion, compared to 80% of Baby Boomers. The study finds that Gen Z places greater emphasis on buying factors such as product quality, brand credibility, and convenience.
Pierre-Alexandre Koch, Partner at Oliver Wyman, said, “Travellers expect novelty, whether through emerging brands, airport exclusives, locally relevant products or continuously refreshed collections that give them a reason to return. Sampling, demonstrations, immersive experiences and storytelling can all help turn passive browsing into meaningful interaction.”
Younger travellers are also more likely to make a purchase when they discover something new. Overall, 44% of travellers buy immediately after discovering a product in travel retail, and that figure rises to 49% among Gen Z, compared with 35% among Baby Boomers.
The findings highlight three priorities for travel retailers: understand traveller needs beyond regional averages to meet specific needs; make travel retail a destination for discovery, value, and engagement; use traveller intelligence to sharpen commercial decisions. Moreover, a clear price advantage remains essential to travel retail, with travellers expecting prices to be around 18% lower than domestic retail.
Vincent Barbat, Partner at Oliver Wyman, said: “Passenger growth alone will not define the next decade of travel retail. The opportunity is to understand travellers beyond the average, tailor the proposition to what matters to them in each location and moment and give them compelling reasons to explore and discover. Travel retail has access to a unique and rich set of traveller data. Turning that intelligence into more relevant and dynamic decisions can become a real source of competitive advantage.”