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“We want to ensure there is enough competition and open up the opportunity to more potential partners.“ |
José Manuel Fernández-Bosch Director of Commercial Services & Properties AENA Aeropuertos |
SPAIN. Spanish airports company AENA is set to launch one of the world’s most eagerly awaited airport tenders of the year, for its core category duty free and travel retail concessions at the country’s airports. The planned tender, which will begin with a pre-qualification phase in July, has already attracted interest from many leading travel retailers.
The main incumbent Aldeasa (World Duty Free Group) and other retailers (Dufry and Canariensis) generated around €550 million in sales from the business in 2011, but AENA is confident that this can be extended to more than €700 million annually, according to Director of Commercial Services & Properties José Manuel Fernández-Bosch.
Speaking exclusively to The Moodie Report, he said: “With major investment planned in many airports – including Madrid and Barcelona – and in extending the floor area for shopping, we expect turnover to grow by +20-30%. The concession fee will also rise by around +30% compared to today, to reflect the projected increase in business. We have benchmarked ourselves against other airports and concessions and we think this is realistic.”
In a major departure from the current single concession operated by Aldeasa (World Duty Free Group), AENA plans to offer either three or four concession lots (to be finalised in coming days), each comprising one or more large-scale locations alongside a number of smaller airports. Madrid and Barcelona will be offered under separate lots, with one dedicated lot for the Canary Islands business.
Fernández-Bosch said: “We want to ensure there is enough competition and open up the opportunity to more potential partners. If it was only in one block, it would be more difficult for newcomers to make strong bids and to enter the market.”
Crucially, there are no restrictions on how many lots a single concessionaire can win. “One company can win every concession, or we may have separate operators for each. It depends on the outcome of the bids,” said Fernández-Bosch.
Currently Aldeasa’s concessions cover 15 airports, with a further six operated by other companies, such as Dufry or Canariensis (an Aldeasa partnership). The bids this year will cover a total of 24 locations.
In another departure from the existing contract, the concessions will cover core categories (fragrances & cosmetics, liquor, tobacco and confectionery) only. Luxury fashion will be the subject of separate tenders.
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The vital contracts at Barcelona (above) and Madrid (below) will be tendered in separate lots |
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Importantly, as noted above, the new concessionaire(s) will benefit from extensive investment at some of the key airports, with extended retail zones planned. “In parallel with the tender process,” said Fernández-Bosch, “we are re-designing the layouts of AENA’s biggest airports. These include Madrid T4, Barcelona T1, Málaga, Palma de Mallorca and the Canary Islands among others.
“Most of the airports will undergo an increase in the surface area available for shopping and other commercial concepts,” he said. “Duty free will gain from expanded space and more walk-through concepts.”
The contracts will run for seven years, with an exit option after five years. Fernández-Bosch said: “We really see this as a seven-year agreement, with an exit after year five only if the concessionaire has not met minimum expectations. But we expect the leading companies can make the numbers work over seven years.”
In the pre-qualification phase, potential bidders will be required to provide technical references and evidence of their bona fides showing their size, expertise and track record of operating duty free at large-scale airports (over 10 million passengers).
A second phase for those who qualify will be launched by late July or early August. AENA said it anticipated that all of the key international players would come through the initial pre-qualification phase, and would then be invited to submit formal tenders for the business.
Offers will be due by late October/early November, with the final two months of the year set aside for evaluation, with final negotiations then undertaken with the leading bidders. Contracts should then ideally be signed by January 2013. As Aldeasa’s contract terms expire in December, the retailer will be given an extension of several months to allow for any handover required. AENA said it would like any handover to take place before the peak summer season next year.
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Aldeasa has made some big investments across the AENA network, including this recent Alicante Airport development |
Asked what his expectations are of potential new partners, Fernández-Bosch said: “We are providing very good retail spaces and we expect them to put forward new and different concepts, new working models and levels of innovation. We look forward to hearing more from the bidders.”
Fernández-Bosch confirmed high levels of interest among Europe’s leading travel retailers, including Gebr Heinemann, The Nuance Group, Dufry, LS travel retail and of course the incumbent WDFG, with other international players, like DFS, likely to take part also, he said.
Some of the international players are examining the potential of alliances with local partners to bid. Fernández-Bosch said: “We welcome any alliances that are formed, though we would need to see that the main international player in any partnership clearly plays the lead role and has a significant stake, at least 40%. We rely on the expertise, track record and experience of the leading players but we are not opposed to partnerships.”
He also insisted that the process would be open and transparent, with no favour given to the long-standing incumbent. “We encourage the major international companies to take part. We have met all of the big European travel retailers, and are happy to meet others to discuss the process. We have had the same discussions about the opportunities with others as we have had with Aldeasa. We are structuring the tender in a way that encourages participation, for instance splitting the contract into different lots. Plus we are planning to give all bidders detailed information on the business, which is important. We believe we are sending all the right signals to the players.”
The tender will be handled by AENA’s commercial department. The airports company used the services of consultants to define its strategy but Fernández-Bosch said that AENA – which he noted has a long track record and much experience in running other commercial tenders at its airports – would run the process itself.
The Moodie Report will bring you updates on the process over the months ahead as one of the most highly anticipated tenders of the year takes shape.
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