Refurbishment, new concession terms and shift in category mix hit Auckland Airport retail income : Moodie Davitt Report

NEW ZEALAND. Auckland Airport posted a -4% decline in retail income to NZ$181 million (US$107.8 million) for its financial year ended 30 June.

This was caused by the combined effects of the staged commercial refurbishment programme, changes to duty-free concession rates and a shift towards lower-margin categories.

Retail performance lagged a +2% increase in passenger movements year-on-year to 19.04 million, with international and domestic traffic both rising +2% to 10.47 million and 8.57 million, respectively.

**Retail results represented a mixed bag with passenger spend rate up but overall income down. All graphics courtesy of Auckland Airport, click on charts and graphics to expand.**

The consumer technology and cosmetics categories rose year-on-year. However, these gains were partly offset by a -6% decline in alcohol income per passenger as lower average duty-free concession rates strengthened the customer value proposition.

The lower concession rates in turn supported conversion rates and a higher passenger spend rate (the average amount of money an individual passenger spends per unit of time), which rose +2% (+5% excluding foreign exchange effects). Core categories performed strongly by this indicator, the company said.

Retail income per passenger (total retail income divided by total passengers, including half of the transit traffic) fell -6% to NZ$9.67 (US$5.76).

Overall commercial income rose +2% year-on-year to NZ$442 million (US$263.3 million)

Car parking income climbed +9% to NZ$79.2 million (US$47.2 million), buoyed by recent capacity expansion, revenue management focus and strong demand for terminal-front parking products

Auckland Airport said its international retail business had been softer amid a reconfiguration of space to optimise single duty-free retailer (Lagardère Travel Retail) performance.

The French company was last year awarded an eight-year contract, which began on 1 July 2025. Over the course of the concession, Lagardère Travel Retail will implement a full refurbishment of all the airport’s duty-free stores.

An ambitious international airside retail refresh is well underway, with stage two of the duty-free revamp complete and a new-look food court opening through this year.

Earnings call comment

Speaking on a post-results earnings call, Auckland Airport CEO Carrie Hurihanganui commented, “Overall, the year is one of steady performance amid global headwinds. We have seen resilient demand for travel to and from New Zealand from an underlying perspective.

“We did see strong momentum in key international and domestic markets in the first half, but certainly it proved to be a more challenging second half due to increasing geopolitical instability, most notably the events in the Middle East.

Commenting on the retail performance, Chief Financial Officer Stewart Reynolds said, “While it was pleasing to see sales, basket size and passenger spend rate all lift during the year, these gains were not sufficient to offset the combined impact of the redevelopment, concession rate changes and category mix shift.”

On the impact, past and future, of Lagardère Travel Retail’s sweeping revamp of the duty-free offer, Reynolds observed, “The duty-free refurbishment was expected to create some short-term revenue disruption, and we are now more than halfway through that programme.

“The works have reduced the footprint of the main departure store by around -30%, but customer metrics remain encouraging. Sales are up +5%, more than double the passenger growth, and basket size has increased +8%, supported by the benefits of a single operator model, a broader range of SKUs and thus greater choice for travellers.

“In that context, against both the short-term disruption from the redevelopment and broader retail market conditions, this is a solid result.”

Hurihanganui added, “The first two stages of the [Lagardère Travel Retail] project have now been delivered, including a new duty-free entrance, revamped walkways, a runway view tasting bar, and New Zealand’s first full-format Victoria’s Secret store. Alongside this, we are underway with an upgrade of the international departures airside dining precinct.

“The duty-free and international airside dining precinct… will bring a significant uplift in the experience when it’s complete. The duty-free refurbishment is expected to be complete by the end of the first half of FY ’27 and fully operational throughout the second half of the financial year.

“The dining precinct upgrades will be progressively completed throughout the first half and 16 new or refurbished dining options are to be delivered by December.”

Analyst reaction: Softer than market expectations

Auckland Airport (AIA) has reported a subdued FY26 result broadly in line with market expectations at a headline level, but with lower quality than the market would have liked.

EBITDAFI of NZ$724m (vs Forsyth Barr at NZ$737 million and consensus at NZ$730 million) was up +3% on the prior year, delivering underlying net profit after tax of NZ$309 million (vs Forsyth Barr at NZ$312m and consensus at NZ$307 million), down -1%. Operationally the result was weaker than anticipated stemming from lower aeronautical, retail, car parking income than our expectations, and higher opex.

AIA’s FY26 result was softer than market expectations at an operating level. This partly (but not solely) reflects the temporary challenges of reduced aeronautical capacity (due to higher jet fuel costs) and the refurbishment disruption impacting retail income. Both of these will continue to impact profit progression through FY27, with growth skewed to 2H27. – Forsyth Barr Research

The company said it is optimistic for FY27, buoyed by strong underlying air travel demand for the upcoming summer peak travel period, and ongoing momentum in its commercial business.

“However, we continue to take a cautious approach in the near term with the current fuel price volatility and geopolitical instability impacting airlines and demand for travel, with flight and passenger volumes expected to be relatively flat in FY27,” Auckland Airport said.

The company offered passenger traffic guidance for FY27 as follows: domestic and international passenger numbers of approximately 8.3 million (down -3.2%) and 10.8 million (up by the same percentage, +3.2%), respectively. ✈

Earnings call comment

Analyst reaction: Softer than market expectations

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