Consolidating the business, protecting cash, adapting to new consumer needs and striking sustainable agreements with airports and other partners sit high on the agenda for Aer Rianta International (ARI) management today, says Deputy Chief Executive Anthony Kenny.

He, along with CEO Ray Hernan and other senior executives, have been plotting a course through this most difficult of years, with people, passenger demand and profitability top of mind.

Reflecting on the period of close to a year since the COVID-19 storm broke, Kenny says: “Of course to say this crisis came as a body blow would be an understatement. Like everyone else we are winded, but we’re not mortally wounded.

Anthony Kenny: Trading is challenging but the business will bounce back

“And it hit in a period when all of our business units were trading really well at the start of the year. Auckland was the first to show weakness and that was because of the slowdown in Chinese travel in early February. Broadly it was March when we felt the full impact and almost all locations closed from late March through to July. Business has opened up since but it has been slow and recovery in passenger numbers has been modest. The government restrictions and the changing rules around travel have led to a lot of uncertainty. So there is a long way to go before we hit 2019 levels of traffic. We have seen tough times before, from 9/11 to SARS, but this is definitely the biggest challenge we’ve faced yet.”

In terms of recovery, Kenny cites the challenge of understanding the consumer in a new world as one the company is heavily engaged with today.

“What we have learned is that they want safety and reassurance but they also want as normal an airport experience as possible too,” he says. “We have been successful with regards to our COVID protocols, and giving people reassurance that they are in a safe environment. Our Passenger Average Spend figures since we reopened reaffirm that. That is down to the in-store measures from sanitation to contactless payments we have put in place, along with the excellence of our staff in managing the customer experience.

“Another thing we have done is to work hard on the relationships with our brand partners to maximise the performance of the business coming back, and to drive sales. That has involved great promotions and calling out value. We have really ramped up our global marketing campaigns, and tried to ensure these resonate and encourage people back into our shops.

“The other element on the passenger side is around ‘harmonised retailing’ or the blurring of the lines between the physical shop and the digital shop. That is about pre-travel messaging and awareness but also convenience, which is key. What convenience means is changing. It is not just about accessing our services but in fulfilment too, whether that means delivery to gate, seat or even home. That will marry with hyper-connectivity, meaning that people want to access services through a range of channels. So we have to offer virtual sales assistants, webchat and be able to answer queries at any time of the day or night.

One element common to every retailer responding to crisis is the need to manage costs and preserve cash. But that in turn needs balancing against the requirement to have a well-trained workforce ready to seize the opportunity once travel resumes. Parent company DAA introduced a target of cutting 25% of staff through a mix of voluntary severance packages and career breaks this year, which also covers ARI.

Kenny says: “We asked ourselves how we saw our revenue lines recovering, and then built an organisation structure and resource that is aligned with those aims. The first line of attack was to minimise discretionary non-payroll spend. We have reduced manpower but while doing that we were also cautious about protecting staff for the future so we don’t damage the comeback.

“You also have to protect today. We were comfortable that if some people left we could cope in terms of experience and knowledge.”

With cash retention and business protection a priority, Kenny notes that ARI – with its strong balance sheet – “has enough cash and liquidity to get us through this crisis”.

Above all, he says, success will be determined by how quickly the industry can react to new consumer demand.

“We are looking closely at our customer value proposition post-pandemic. How do we need to redefine and repurpose in the light of changed customer needs and expectations? While some of those needs and expectations may be temporary, other ones will be permanent. We have put together a cross-functional, cross-location team, looking at our customer value proposition. And then we are asking how do we need to redefine our offer and our proposition against those needs and expectations? That is a big focus for us.”