Study on the Correlation Between Ticket Price

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Study about the Correlation Between Ticket Price

and Duty Free Basket Value

By Mariami Sikharulidze, Bahcesehir University Berlin

2015

Table of Contents

Introduction        

Main Question and Motivation        

Structure        

Theoretical Part        

Traveling        

Duty Free Shops        

Empirical Part        

Method Selected        

Results        

Summary, Comments and Critiques        

Summary        

Comments and Critiques        

Implications        

Bibliography        

Appendix        

Introduction

Main Question and Motivation

This research is conducted to see the relationship between the ticket value and the duty free basket value. The idea to do this research came to me because of my past experiences with duty free industry. The main reason why I chose to study business administration was my trip to Hamburg, Germany in 2009. To explain it briefly, back in 2009 I did an internship in the Georgian duty free retail company Marsel Duty Free. Me and my superiors had to travel to Hamburg to make the cooperation with Gebr. Heinemann, which is one of the leading travel retail companies in the distribution, airport retail and cruise ship retail areas. Seeing their company building, their warehouse, attending meeting, basically seeing the insight of the duty free retail inspired me to study business administration. After my graduation, my main goal is to continue working in this area. So for me it is fundamental to have as much information as I can get about this industry. And so this research project was a good opportunity for me to learn about  the market more.

Another reason why I am focusing on duty free retail is because in one of my source it is indicated that; “The Global duty free sales are forecast to reach US$73.6 billion by 2019, growing at a CAGR of 8.6%.”. So again this research will give the idea of how big the duty free  retail is.

Structure

        Firstly I will be focusing on the definition of main topic travelling. Than I’ll explain what duty free retail is. Then I will provide methods I used during my research. I will describe the core of my method, After that I will analyze the results to provide the answer to my main question. Lastly I will summarize the result and discuss about the outcome of the research.

Theoretical Part

Traveling

        Firstly, I would like to explain what traveling is exactly, Well traveling is the act of going from one country/city to another country/city.  The one thing that I understood though is that travel, and the purposes behind it, can not be bound into one and simple explanation. Because everyone has their own reason to travel. Some travel for discovering new cultures, to learn about new places, it’s history, traditions, food, art, the lifestyle of people living in that place. Some travel for business and work related issues or for academic reasons for example to learn new language. Others travel just to refresh themselves, to take a break, to clean their mind, to escape from their ordinary lifestyle.  Although whatever might be the reason to travel, there are only specific amount of transportation they can use to travel. Which are; plane, ship, car, train, bus or even by foot. In most of these transportation points duty free stores are located. So traveling has the direct impact on how duty free retail companies are performing.

Duty Free Shops

The world’s first-ever duty free shop opened at Shannon Airport in Ireland in 1947. The store still works today. Duty free shops are retail outlets, located in the international zones, such as airports, train stations, sea ports, and even border points for passengers traveling by ground transportations such as car or bus or even foot. The main idea of duty free stores is that, passengers who are leaving a country can buy goods in the store without any tax imposed within that country. According to the article from financial times; “Duty free shopping is a huge business – not only is there no stigma attached to it in the wake of the 2008 markets crisis, its considered by far the most efficient and preferable purchasing route for prestige goods by millions worldwide. As a multi-brand retail channel where customers can claim back VAT, DFS resonates with the global luxury customer more than ever” (Elizabeth Paton 2013).

Empirical Part

Method Selected

        To understand the relationship between the ticket value and duty free basket value of passengers, I chose to conduct a quantitative research. So I made a questionnaire with the total of six questions. The core of my questionnaire was to get more answers than I can get from an interview. Because I needed large amount of answers to analyze the market more efficiently. So after designing my questionnaire, I went to Berlin Tegel Airport, and asked to the random passengers to participate in my survey. I got thirty one participants. I asked questions whether they shop or not at duty free stores, how much they are spending while shopping, which ticket type do they have. So answers to this questions helped me to answer my main question. After I got the results I used mode. And I did a cross table, and by this I answered my main question very easily. Because by doing a cross table I combined two main questions from my survey which gave me a result for my research.