The Shilla Duty Free and Sky Connection joint venture and King Power Group (HK) have won Macau Airport’s two duty free contracts.

 

Sources directly involved in bidding for the two five-year DF&TR airside departure contracts confirmed that CAM – Sociedade do Aeroporto Internacional de Macau S.A.R.L made the results known yesterday.

As reported already, CAM’s ‘Option A’ offered 1,122sq m, and Option B around 1,130sq m, with both five-year contracts covering retail spaces located at the airside departure level of MIA. Both new contracts are scheduled to begin on 7 November 2014 and expire on 6 November 2019. CAM’s decision to split the business – historically worth just over $160m a year – into two contracts was not popular with everyone and DFS Group made it clear to TRBusiness early on that it would not be bidding due to this factor.

No more details are available at present, since both companies are reliably understood to be finalising the finer negotiations of their agreements with CAM. The victories represent a return to mainstream airport retailing for Sky Connection to add to its Hong Kong-China railway business and ferry terminal shops and another overseas flag on the Asian map for Shilla Duty Free following its significant P&C contract win at Singapore Changi Airport earlier this year.

A total of 5,027,170 arriving and departing passengers used Macau International Airport in 2013, up from 4.4m in 2012 and 4.0m in 2011. The top ten arriving customer nationalities last year were: Mainland Chinese (1,678,804); Taiwanese 1,373.037; Thais (887,540); Malaysians (289,735); Koreans (222,957); Filipinos (190,910); Singaporeans (180,792); Vietnamese (84,618); Japanese (82,203) and others (2,292). The highest daily traffic periods for departing passengers are between 10.00am to 1400 and 18.00 to 22.00.

MODEST PAX NUMBERS OF 5M
In its tender documentation, MIA says that between 2003 and 2013, passenger numbers increased by 73%, from 2.9m to 5m. Furthermore, passengers departing from or arriving at MIA, increased from 1.5m to 4.6m, up 219%.

Under the existing contract which shortly expires, King Power Group (HK) trading as the King Power Duty Free (Macau) Company holds the exclusive rights to operate eight shops, a further eight kiosks and one mobile kiosk. The eight shop categories and spaces currently comprise two Perfume & Cosmetics shops (394sq m); two Liquor & Tobacco outlets (365sq m); Candies & Souvenirs (278sq m); Watch & Jewellery (249sq m); and two General Merchandising shops (248 and 240sq m).

The eight fixed kiosks and one mobile unit cover international fashion brands (6 outlets); one bookstore and a small mobile airside arrival liquor and tobacco kiosk.

In its RFP MIA says that it expects offers for both packages to see 40% of retail space allocated to L&T and P&C, with all other categories accounting for the remainder. Interestingly, MIA is excluding in-store advertising from the packages.

 

King Power Duty Free (Macau) Company at Macau International Airport.

 

[Comprehensive information on the background to this tender can be found at the following link: http://www.trbusiness.com/index.php/regional/asia/15056-macau-looks-for-two-dfatr-operators.html]

HISTORIC HUB STATUS
The total passenger terminal area at MIA is 45,000sq m, consisting of arrivals, departures and mezzanine levels and the 24-hour airport has an annual passenger handling capacity of 6m which means it is currently operating at 1m-passengers under capacity and is not normally congested.

MIA has traditionally been a preferred transfer hub between Taiwan and Mainland China and China’s Pearl River Delta and the rest of the world, although fast increasing direct flights between Taiwan and China are continued competition.

Airlines currently using MIA include the following: Air Asia Airlines; Air Busan; Air China; Air Macau; Cebu Pacific Air; China Eastern Airlines; Easter Jet; Eva Airways; JetAsia; Jin Air; Juneyao Airlines; Philippine Airlines; Shanghai Airlines; Shenzhen Airlines; Sky Shuttle Helicopters; Spring Airlines; Thai Smile; Tiger Airways; Transasia Airways; Uni Air; Vietnam Airlines; and Xiamen Airlines.

[TOP IMAGE: The King Power Group HK has operated the airport’s duty free business exclusively since it opened in November 1995 and it has also transformed them].