US. Los Angeles World Airports (LAWA), a Department of the City of Los Angeles, announced today (Friday) that it will be issuing a Request for Proposals (RFP) from firms to operate the airport-wide duty free concession at Los Angeles International Airport (LAX). DFS is the incumbent retailer.
LAX ranks sixth in the world and third in the US in total passengers, and is the third-busiest airport in the US in terms of international passengers. LAX handled 15.9 million international passengers in 2010.
The LAX duty free concession will be the second-highest-grossing duty free contract in the US, LAWA said. Only the concession at Honolulu International Airport (also run by DFS) produces higher annual sales volume.
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LAWA said that in addition to the high annual sales volume, the LAX duty free concession presents a number of opportunities for potential duty free concessionaires:
• A presence at the dominant airport serving Los Angeles and Southern California and the leading gateway on the West Coast of North America.
• A highly visible international presence in a world-famous international tourism destination.
• Access to a major international US gateway serving fast-growing US-China and other US-Asia markets, as well as airlines serving Europe, Australia, the Pacific, the Middle East, Mexico, Central and South America, Canada and Mexico.
• Entry to the US concession market at a top-three, high-profile airport.
• An operating presence in all LAX terminals handling international departures, thereby mitigating the effect of future airline relocations.
• Excellent location in the new post-security retail area of the Tom Bradley International Terminal, now undergoing a US$1.5 billion transformation into a world-class international terminal.
LAWA is encouraging qualified duty free retailers to learn more about the concession opportunity and to participate in the selection process. The RFP is scheduled to be issued in September of this year. The commencement date of the concession is scheduled to be no later than 1 January 2013.
DESCRIPTION OF THE OPPORTUNITY
In 2010 duty free sales by the incumbent operator, DFS, totalled US$106 million, a sharp rebound from US$83.9 million in 2009. Of this amount, 7% was sold at the concessionaire’s off-airport shop. The next LAX duty free concessionaire will also have the ability to operate shops off-airport, LAWA confirmed.
International departures currently take place from seven of LAX’s nine terminals. However, most of the international traffic and duty free sales are concentrated in the Tom Bradley International Terminal (Bradley Terminal) and Terminal 2 (US$65 million and US$23 million sales respectively in 2010). Currently the major duty free shop in the Bradley Terminal is located pre-security, with small “˜last chance’ shops located on the concourses.
Today’s pre-security location limits purchases of liquids and gels, and is missed by a significant share of departing passengers who expect the major duty free shopping opportunity to be post-security.
Space will be provided to the new operator in all other terminals. Duty free space in T2, the second most productive terminal at LAX, will increase to about 4,000sq m of selling space.
EXPANSION OF THE TOM BRADLEY INTERNATIONAL TERMINAL
The Bradley Terminal accounts for the majority of LAX duty free sales. The large majority of sales are currently made in the 14,000sq ft (1,300sq m) main shop, which is located pre-security between the two security checkpoints.
The Bradley West project will create a main post-security shop of 14,005sq ft (1,301sq m) as well as three locations for stand-alone high-end luxury boutiques or specialist duty free shops of 1,747sq ft (162sq m) each.
An additional block of 4,667sq m (433sq m) will also be available to the concessionaire for duty free or duty paid retail, bringing the total retail area under the new concession agreement in the Bradley Terminal to approximately 24,000sq ft (2,230sq m).
Inventory storage and support space will be available on a lower level of the terminal, with another 1,700sq m of space directly behind the main shop.
The post-security concessions floor plan is shown below, with areas included in the duty free contract shaded in green. The arrows show the route passengers will take to the two departure concourses. In addition there is one frontal gate located near the main duty free shop, indicated by the smaller arrow.
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INDUSTRY INPUT SOUGHT
Until the RFP is completed and issued LAWA, including through its consultant, invites comments and recommendations on the duty free concession opportunity and upcoming evaluation process.
Input on the potential business terms to be incorporated in the RFP and the concession agreement is also welcomed.
To assist in obtaining industry input LAWA has retained the airport consultancy LeighFisher.
Interested parties are encouraged to contact LeighFisher Director Bruce Boudreau or Denise Sample, Managing Director of the Commercial Development Group at LAWA, using the contact information provided below.
Either Boudreau or Sample will be pleased to provide additional information and answer questions about the concession opportunity, LAWA said.
CONTACT
Bruce Boudreau
Director
Leigh|Fisher
555 Airport Boulevard, Suite 300, Burlingame, CA 94010, USA
Tel: 1 650 375 5366; Mobile: 1 650 455 9112
bruce.boudreau@leighfisher.com
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