ISRAEL. Israel Airports Authority (IAA) is poised to release tenders for the duty free concession and other commercial services at the much-anticipated new Eilat Ilan and Assaf Ramon Airport near Eilat, which will open in 2017. The airport will replace the Eilat and Ovda airports. But against a highly sensitive contractual backdrop, the IAA is yet to finalise any decision over its Terminal 1 and Terminal 3 duty free concession structure at Ben Gurion International Airport in Tel Aviv for when T1 re-opens fully to international departing passengers next year.
The new airport will mainly serve domestic and international incoming tourism to the city of Eilat and the southern resorts of Mitzpe Ramon and the Dead Sea. Ilan and Assaf Ramon Airport is described by the IAA as a “unique national project” due to being the first domestic/international airport in Israel to be planned and constructed from top to bottom. It is located in the spectacular Timna Valley and has been widely described in the Israeli press as one of the world’s most beautiful airports.
The airport is named after Ilan Ramon, Israel’s first astronaut and a national hero, who was killed in the 2003 Colombia space disaster, and his son Asaf Ramon, who died in a 2009 flight training accident. It will handle around 1.3 million passengers in its first full year (around 150,000 international), rising to 4 million in the near term.
Speaking to The Moodie Davitt Report late last month, IAA Deputy Director General – Commerce and Business Development Yoram Shapira said: “Everything [at Ramon] is going to tender: duty free shopping, F&B, parking lot operators, advertising – everything you can imagine in an airport.”
The 30,000sq m terminal will handle around 1.8 million passengers per year (around 150,000 international), with the IAA promising a range of high-quality services and various commercial, catering and duty free shopping areas.
Eilat is a tax free zone and the airport services will operate on a common-usage basis for both international and domestic passengers. All will be able to buy duty free goods such as liquor, at the same price, IAA says, and other goods on a VAT-free basis (as in the local market). Details are still being finalised for a model that, if implemented, could impact duty free sales to outbound passengers from Ben Gurion.
In the case of a domestic passenger the IAA will take a lower concession fee with the difference going to Customs. The concession will cover liquor, tobacco, beauty products, confectionery, destination merchandise and accessories.
BEN GURION TENDER SITUATION HIGHLY SENSITIVE
Meanwhile, contrary to reports elsewhere, the IAA has still to finalise its contract plans relating to next year’s full re-opening of Tel Aviv Ben Gurion International Airport T1 to international departing (not arriving) passengers.
Because that shift will dilute traffic at the existing international T3 (around 1.4 million of the airport’s current 9 million departing international passengers will fly from T1), the change will have a big impact on incumbent duty free retailer JR/Duty Free. How that matter is resolved is yet to be decided, The Moodie Davitt Report can confirm. Whether IAA issues two new tenders (with likely different retailers) or no tender is still being evaluated. JR/Duty Free flatly declined to comment, while Shapira said that the decision is still being evaluated.
The matter is highly sensitive and we will bring you the outcome in an extended interview with Shapira in coming weeks.
Because of surging passenger numbers at Ben Gurion (up +35% over the past four years and +9.8% in 2015), the authority has opted to increase international flights out of T1 next year. That terminal became a domestic passenger-only terminal in 2004 when the new international T3 opened. But due to a rapid increase in passenger traffic, the IAA started using T1 from late 2013 to handle certain international low-cost flight passengers. Passengers currently check in there and pass through all regulatory checks, before being bussed to T3 where they can shop duty free before departure.
Shapira told The Moodie Davitt Report that T1’s international passengers will be offered a full range of in-terminal commercial services, including duty free.
“What we are planning is that less than a year from now we will operate T1 just as we used to – though only for departing passengers,” he said. “That means we want to operate full duty free and F&B at T1 as it used to be.”
As reported, JR/Duty Free won the seven year and three-month contract (with a 3-year extension option) in 2014 with a minimum annual guarantee of US$169 million, narrowly heading off a rival bid from Gebr Heinemann Israel (a joint venture between German travel retailer Gebr Heinemann and Russian-Israeli company Alfa). The concession covers liquor, tobacco, confectionery, perfumes, cosmetics and drugstore retail spread over 3,300sq m of retail space.
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