June 5 2024  |  Industry News

Avolta and utu join forces in VAT refund innovation

By Hibah Noor

Avolta is collaborating with travel fintech company utu to launch a pilot program to maximize duty-free shopping opportunities by enhancing the VAT refund process at Milan’s Malpensa Airport Terminal 1 and Milan Linate Airport in Italy.

The innovative program offers travelers 25% more spending power by upcycling city-side VAT refunds, aiming to unlock significant airside duty-free revenue growth.

Kicking off this month, the Avolta x utu program is set to redefine the traveler’s retail journey by transforming VAT refunds into duty-free vouchers redeemable in Milan. While the pilot is focused on Avolta’s Milan duty-free operations, if successful the program will be rolled out across its global shop network, unlocking additional sales potential for Avolta worldwide.

From early June, non-EU travelers can easily convert their VAT refunds from city-side purchases into airside duty-free vouchers worth around 25% more than their original refund. By erasing the line between cityside and airside shopping, the program maximizes the potential of VAT refunds, offering travelers increased spending power, which they can access instantly through utu’s dedicated web solution available on all smartphones. Tourists will continue to complete the standard tax refund process at the airport prior to departure.

In the global travel retail sector, an estimated US$4 billion in VAT refunds processed at airports goes unclaimed each year. The Avolta x utu program will be the first to capture this market at scale, capturing VAT refunds that might otherwise leave the country, as an incremental sales driver for Avolta’s airside retail stores in Milan and, if successful, on a global scale.

Maurus Lienhard, Chief Strategy and Transformation Officer at Avolta, said, “utu’s proposition puts the traveler at the center by providing additional value and enhancing their journey; this fits perfectly within our Destination 2027 strategy. We are excited to launch utu in a major European travel hub where tax-free shopping plays a key role and look forward to sharing its benefits with our customers. Additionally, we see potential to leverage our global network with a presence over 73 countries and 5,100 points of sale to roll out this program, driving sales growth for our business. utu's innovative solution complements our mission to make the journey as rewarding as the destination and unlock new sources of value.”

Ameer Jumabhoy, Co-Founder of utu, commented, “Our partnership with Avolta demonstrates the untapped potential within the travel retail ecosystem. By rewiring the tax-free and duty-free value chain, we're creating a win-win for travelers and airside retailers. We believe this model can be replicated in airports worldwide, driving multi-billion dollar growth for the industry.”

utu has already garnered significant attention within the travel retail industry. In 2023, utu's solution impressed judges at Avolta’s NEXT Global Innovation Challenge, a showcase seeking visionary ideas to elevate travel retail. Selected as one of 14 finalists from over 140 entrants, utu secured a funded project with Avolta.

The program launch will be supported by a strategic marketing campaign featuring a mix of digital promotions with in-person engagement. Avolta x utu ambassadors will be placed in key locations in the Milan city center and within Malpensa Airport T1 to educate travelers and drive awareness of the offering.

As the project progresses, the travel retail industry will be assessing the impact of unlocking refunds earned city-side on their own airside duty-free sales. The Avolta x utu model will serve as a blueprint for airports and retailers worldwide, with an opportunity to unlock a new era of growth for the travel retail sector.

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