ISRAEL. Israel Airports Authority has extended the bid deadline for its core duty free contract at Tel Aviv Ben Gurion Airport Terminal 3. The authority will allow submissions until 20 June, two weeks after the original 6 June deadline, in response to “˜requests from those who have paid participation fees’.
In the same tender clarification, IAA acknowledged that a company (confirmed yesterday as JR Duty Free) had issued a petition against the authority, asking for “˜either the tender terms to be amended or [the tender] to be cancelled, as well as a temporary injunction [on the tender process]’.
IAA reported that the court had dismissed the request for a temporary injunction and has given the authority until 2 June to respond to the petition, with a hearing scheduled for 4 June.
Meanwhile further details of JR Duty Free’s challenge have emerged.
An article on the website of Israeli business newspaper Calcalist , subsequently confirmed by The Moodie Report, reveals that JR Duty Free believes that “the tender includes several unreasonable terms and conditions that do not enable the reasonable calculation of a bid”.
Among these are uncertainties over the potential future operation of duty free retail at Ben Gurion Terminal 1 – not included in the current tender. IAA has clarified that the operator at T3 will be granted permission to retail at T1 if duty free is introduced there, but has not laid out a joint payment mechanism covering both terminals.
JR Duty Free claims that, if the IAA does not provide for a fee structure covering both terminals, “two separate payment mechanisms might put the IAA in a conflict of interest, as it may choose to regulate the passenger flow between Terminal 3 and Terminal 1, to maximize the license fee paid by the concessionaire”.
The second ground is that the contract mechanism for updating payments in response to regulatory changes is ineffective, as it gives the operator “no interest to minimize the damage and become more efficient, as this would reduce the compensation for which the company is entitled”.
JR Duty Free also claims that the US$150 million minimum annual guarantee required by IAA is too high as a proportion of sales. However the report adds that JR Duty Free will not seek for IAA to reduce the amount if it responds on the other two grounds.
The Calcalist report concluded: “˜The IAA has advised that they will respond to the claim in court.’
NOTE: Look out for a full analysis of all the latest developments in the Tel Aviv tender in this week’s issue of The Moodie Report e-Zine, out tomorrow.
