Martin Moodie
THE MOODIE REPORT
Today, as president of King Power Traveler and the Founder of Centaur Travel Retailer, Rakhita Jayawardena is enjoying a golden autumn to a career that ranks alongside his family and his country as one of the loves of his life.
Indeed he has now stepped away fully from Centaur and handed the reins to daughter Yuvani as managing director/CEO, who is assisted on the Board by second daughter Aneeka.
He left it in good shape – Centaur’s flagship brand Akita has, the company claims, become the most successful electronics brand worldwide in inflight retail.
Mr Jayawardena senior’s story has been related a few times down the years but it doesn’t become any less fascinating in the telling.
How it began
Professionally, it began as a young general manager at Sri Lanka Airlines, which was then in the course of transition from management by Singapore Airlines.
One of the first Sri Lankans to take over from a Singaporean, he was charged with developing the then-fledgling business of duty free.
His expertise and passion for the business would subsequently take him all around the world, from South Africa to New York, the UK to Hong Kong – and most places in between.
At Sri Lankan Airlines, Mr Jayawardena transformed a “dormant, non-profit oriented activity into a profit-oriented passenger service”.
It was, he says using a favourite phrase, “a paradigm shift” and he’s been agitating for change just about ever since.
“This has got tremendous momentum,” he says.
“Many carriers are appointing ancillary managers and ancillary revenue has become a core part of the activity of the airlines. It’s the fourth element of inflight service – the drinks, the food, the entertainment and the shopping service.”
But back in his early Sri Lankan days things were very different. Internal recognition was one thing, getting the industry to take notice was just about impossible.
Not for the final time in travel retail, inflight shopping was deemed a poor relation of the industry by certain suppliers.
But Mr Jayawardena, and Sri Lankan, punched above their weight, astounding a largely ignorant industry by winning major accolades at the Frontier Awards in 1984 and 1986.
“We were rated among the best retailers in the world. Can you imagine – from an island country which a lot of industry people didn’t even know where it was!” he said.
Changing the world
Famously, Mr Jayawardena then departed for his first external consultancy, with South African Airways. But it wasn’t any normal consultancy for South Africa was a very different country back then.
“It was the height of apartheid,” he recalls with emotion, “and here was a coloured man, as they would say back then, being given a contract.”
What was that like for him? How did he feel as a young man from Sri Lanka going into the very white man’s world of South Africa?
“There were many divisions [for whites and non-whites] – the beaches, the lavatories and so on,” he says.
“However, I must say the board of South African Airways, which was an all-white board, was absolutely fair. Otherwise they would not have given me the job.
“They recognised my skill, they recognised my talent, and then they gave me the job to completely revive and re-launch the inflight business.
“I still remember when I first presented to the South African board. At the time that they were having to fly around the Cape because of all the restrictions on them.
“And also they didn’t have much merchandise, because there were heavy restrictions and no-one was selling to them because of all the embargos.”
Perversely, in hindsight, it was a “coloured man” [to use their parlance, not ours –Ed] who was able to secure supply.
Having secured the contract, mr Jayawardena’s extensive network ensured that he could source a range of big international brands.
“I saw the opportunity that if we could get products and brands onboard, we could sell to the people and that’s exactly what we did. We managed to get all the brands we wanted,” he said.
But the biggest breakthrough came when Mr Jayawardena famously convinced the management to remove several seats from various aircraft to allow more duty free trolleys onboard.
“I told them, ‘I’ll give you more revenue if you give me more space on the aircraft’,” he said.
“I made this presentation to remove seats and somebody on the board said I was mad because the airline’s core business was to sell seats.”
Mr Jayawardena recalls his reply as if it was yesterday: ‘Yes, sir. It’s the mad people that change the world.’ “And then they removed the seats.”
But it was far from madness. From there progress was rapid and impressive.
Spend per passenger (not customer) rose to US$18, which was the highest for any scheduled carrier in the world ever, Mr Jayawardena claims, and particularly noteworthy given retail prices were a lot lower back then.
“I remember that we made more revenue from duty free than we did from the mail revenue, which was also high at the time,” he said.
Helping create a global giant
Mr Jayawardena’s next big move came with a move to the USA, where he took over as President of the world’s biggest inflight concessionaire of the time, IDFS, working with the mercurial Jean-Marcel Rouff.
The Sri Lankan played a big role in the rejuvenation of IDFS, which became the first truly global inflight concessionaire, driven largely by Mr Jayawardena’s success in securing a flurry of Asia Pacific accounts.
“We put our footprint all over the world,” he remembers. “Plus it was a unique model; we were actually the exclusive inflight distributor for all the brands in America.”
The rejuvenation was complete, and ultimately IDFS would be sold to Duty Free International for 15 times earnings.
With his job done, Mr Jayawardena stepped out of the limelight for a while. But not for long.
I remember as Editor and Managing Director of Duty-Free News International in the late 1990s being summoned by then-Alpha Group boss Paul Harrison to the company’s headquarters near Heathrow Airport.
“Who would you hire if you wanted the guru of inflight duty free to drive your business?” he demanded of me.
The answer was obvious. Mr Jayawardena was back, this time heading Alpha Onboard Sales & Services, a joint venture between him and the UK plc Alpha Airports Group.
That marked the beginning of an intensely competitive period in the inflight retail world.
As BAA struggled to come to terms with its new acquisition (later bought back by Rouff after BAA closed the business), Benny Klepach’s Miami-based DFASS emerged as a growing force and Alpha OnBoard Sales & Services successfully chased down a number of accounts.
After his time with Alpha ended, Mr Jayawardena decided it was time to relocate from the UK to his homeland in Colombo, saying at the time “It was time to rest for a while under the coconut palm trees in Sri Lanka”.
Powering Up
But rest and Rakhita Jayawardena are not natural bedfellows.
Nearly 10 years ago, in August 2004, he joined his long-time industry friend Antares Cheng (Managing Director of King Power Group Hong Kong) in an inflight retail partnership called King Power Traveler.
All logistics, warehousing, operational, administrative and financial activities were based in Hong Kong.
But business development and supplier relations happened out of Sri Lanka where Mr Jayawardena was also developing his own successful product supply business called Centaur Travel Retail.
Over the past decade, King Power Traveler has focused on a wide range of niche accounts, often on smaller airlines, rather than trying to chase down the bigger national carriers where the price of entry via open tenders can seriously compromise profitability.
Recently, King Power Traveler strengthened its burgeoning inflight duty free portfolio via new contracts with Fiji Airways, VietJet Air, Air Vanuatu, Solomon Air and Golden Myanmar.
It also announced an exclusive wholesale supply service contract with VietJet Air, the first privately owned airline in Vietnam.
“We have been focusing on the middle to smaller airline market business and not with the big ones at the moment,” he says.
“I find that if I double my business on a small carrier it’s like getting two carriers.
“We’ve gone to places like Mongolia, Bhutan, Papua, New Guinea and Myanmar, where we have pioneered the concept of full concession inflight retailing in new markets.
“The competition is really stiff for the major Asian airline accounts and you have to bid very high to win them.
“So therefore, we have gone into territories that other people have not ventured into. And we have developed a good quality long-term business with all our partners.”
A personal view
Inflight retail does not win everyone’s favour though. A number of high-profile brands have withdrawn in total or in part from the channel, while many suppliers claim they get paid slowly (and sometimes not at all) on too many occasions.
What is Jayawardena’s view?
“As far as I’m concerned, I’ve done 30 years of retailing, and one of the primary things is that I have respected supplier relationships,” he replies.
“They’re key strategic partners