This is a great business. The great thing about airports is that they are local monopolies and the great thing about the retail part of the business is that it’s an unregulated monopoly. The industry is ripe for consolidation and as you note there are negotiating power gains to be had for the largest player with both the airports and the brands. In selecting acquisition targets and organic growth options, I imagine that Dufry is targeted in the airports it wants to enter, looking for areas where international flights are an increasing portion of the travel traffic. Is Dufry involved in the downtown duty-free outlet business where a store could have a larger, but less captive, audience? Does, or would, this have a huge impact on the greater operating model?
The point about shifting displays to suit the international flight arrivals is an interesting one. It makes a lot of sense, as do the types of items they sell, non-perishable, non-commodity goods with global brands that are often taxed at punitive levels outside of the duty free retail channel. Is there any room for them to expand their category mix to include some of the other luxury goods one could buy in Heathrow for example (leather goods, jewelry, other accessories)? Or are the current categories proven as the most economical offerings?
Ah Will! You’ve found every East Coaster’s biggest gripe with this one! It’s really a shame how inefficient the system is. Even in the Northeast corridor, as Laurent points out, the trains could be so much faster. My understanding is that the Acela trains themselves are not the limiting factor, but rather the tracks and overhead lines cannot support high speeds all along the route. They also run into problems with sharing spaces with freight and commuter rail. The investment to fix these kinds of infrastructure problems would be immense, involve other public and privately run rail entities, and would like require cutting service while upgrades were performed. As a semi-public entity, major change would be very hard for Amtrak to accomplish. I give them some credit for small improvements overtime, including the app, delay alerts, and the ability to change your ticket on the run from your mobile device rather than waiting at the ticket counter or kiosk. While it inconveniences the traveler, no longer offering refunds for missed trains was probably a smart financial decision. Many of these improvements are far from smooth, but they do utilize technology to capture some low-hanging-fruit.
As you note, the business model and operating model here are two separate things and the organization does not have the authority to unite them. It’s hard to see a scenario where the tough decisions Amtrak would need to make to become a well run entity would make it successfully through the legislative process. There is certainly a question of whether this business would be better managed by the private sector, but in that case, would we be left with any rail transit at all?
This is very cool. The business model makes a lot of sense as they’ve managed to pull a lot of the physical costs out of the operation. A big positive is that it lowers the barriers for people to buy and sell art, not only lowering the cost of the transaction, but likely facilitating transactions that would not otherwise occur. I wonder how crucial it is for an art buyer to be able to see a piece in person and if Paddle8 will come up with a creative way to address this need in the future. I imagine the 30-day payment window acts as an escrow system as well, similar to what we saw in the Alibaba case, to assure buyers that the seller won’t be paid until the piece is sent. For many online marketplaces, creating the symmetry of expectations and obligations between buyer and seller seems to be key to prolonged success.