SAIPAN. The Commonwealth Ports Authority (CPA) Board has decided to put the master concession held for many years by DFS (Duty Free Saipan) for Francisco C. Ada/Saipan International Airport out to bid.
The retailer, which has operated at Saipan since operations began in 1976, will continue on a month-by-month basis from contract expiry in November until a new concession (embracing duty free, specialist retail and food & beverage) is awarded.
Executive Director MaryAnn Lizama told The Moodie Report: “It is correct [that we are going out to bid]… I’ll be writing now to the Attorney General’s office as well as the office of the Public Auditor. I’m going to have them take part in the process so this thing is done right.
“I’ll be making sure that we have a team of experts… and then we’ll take it on from there.”
“Once we have the team in place – which will consist of the Attorney General, the Public Auditor, our legal, our control and our engineering, plus we will also be bringing in professional services that cater to this type of work – we will come up with the scope,” said Lizama.
She said the board vote was 4-2 in favour of putting the contract out to bid. Four votes were necessary for change.
The split vote reflected strong opinions on either side. Some believed that DFS deserved a vote of loyalty for its long-standing commitment to Saipan while others considered that going to market would ensure a better return to the Authority, helping to fund future airport development.
The bid is certain to attract considerable international interest, notably from South Korea’s two travel retail powerhouses, Lotte Duty Free and The Shilla Duty Free. Lotte wrested the Guam Airport concession off long-time incumbent DFS in 2013, formally opening the following year, and has made no secret of its interest in the Saipan opportunity.
In 2014 the Commonwealth Ports Authority published a study by consultant Ricondo & Associates into Saipan International Airport’s concession programme and leasing strategies. That study recommended a choice of three options: a successor master concession agreement; a pure duty free retail concession; and a master concession on an upfront payment basis to help fund specifically identified capital needs. After much debate, option one has been chosen.
DFS has played a pioneering role in the development of Saipan’s aviation and tourism business. In order to fund the building of the terminal in the mid-70s, the Marianas District Government invited bids for the right to an exclusive 15-year contract for the duty free concession. Duty Free Shoppers, as it was then known, won the tender, leading to the opening of Saipan International Airport on 25 July 1976. There the retailer ran the duty free stores, the general retail and cafes, bolstered later by hotel and downtown shops (including today a T Galleria).
Look out for our analysis of the Saipan opportunity in this week’s edition of The Moodie e-Zine.
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