Auckland International Airport has announced that LS Travel Retail Pacific and Aer Rianta International have both been selected as the two new competing retailers to operate its duty free arrivals and departures shop business.

 

Both will take over seven-year contracts from 1 July 2015 from the incumbent DFS Group and JR/Duty Free who presently compete for business at the location.

 

In a statement released to the stock market, Richard Barker, Auckland Airport’s General Manager of Retail and Commercial confirmed the winners, acknowledging that the airport had received ‘five strong bids’.

 

However, one of the incumbents, JR/Duty Free told TRBusiness that ‘it is important to note’ that it pulled out of the final stages of negotiation on Monday of this week due to what it termed ‘the high level of uncertainty and a very onerous contract, which together took the level of risk too high’.

 

Meanwhile, Auckland’s Richard Barker said he is convinced that both LS Travel Retail Pacific and Aer Rianta International will provide the airport’s passengers with shopping experiences ‘unrivalled anywhere else in the country’.

 

 

 

‘WORLD FIRST’ OFFERS PROMISED

In a lengthy statement, he added: “The selection of these two operators helps ensure that our passengers will be able to choose from a wide range of products and services that represent the best of New Zealand and the world. There will be many new duty free brands and retail concepts, including a number of world firsts.

 

“Travellers will start to see the positive impact of the two new operators on 1 July this year, however, the biggest changes will come once we have opened our new international departure area.

 

“The appointment of LS Travel and Aer Rianta will also result in a significant expansion of our online retail channel, including ‘click and collect’ which provides passengers with the option of buying online and collecting their tax-free and duty free purchases when next travelling internationally.

 

“Importantly, we expect the appointment of LS Travel and Aer Rianta will eventually result in even more employment opportunities at the airport.

 

“Auckland Airport is focused on strategically growing its duty free and retail business and providing travellers with a great shopping and travelling experience. The selection of LS Travel and Aer Rianta will allow us to do just that. Both operators have proven themselves overseas to be driven and innovative in achieving strong, customer-focused, growth in airport duty free retail.

 

 

 

BETTER OFF TO THE TUNE OF $3.7M

“As a result of the duty free tender and other changes in specialty stores, we expect our earnings before interest, tax and depreciation in the 2016 financial year to increase by an additional NZ$5 million ($3.7m).

 

“The selection of LS Travel and Aer Rianta will enable our duty free shopping to become one of the best in the world, and shows our ongoing commitment to our passengers. This announcement is also an important step as we implement our 30-year vision to deliver Auckland and New Zealand’s ‘airport of the future'”, he said.

 

Adding his comments, Matthieu Mercier, LS Travel Retail Pacific’s CEO said: “The win signals an exciting new chapter for both LS Travel Retail Pacific and Auckland Airport. LS will boost the airport’s duty free offer with innovative ideas, and we will leverage our extensive vendor relationships and global experience by offering a wide range of big name brands in perfume & cosmetics, local wine and liquor to name a few.

 

“Our goal now is to make it happen and to create a fantastic duty free experience that exceeds passenger expectations, and I believe that our vision for Auckland Airport will achieve this and more.”

 

Last, but never least, Aer Rianta International’s CEO Jack MacGowan also described the win for his company as ‘a wonderful opportunity’ for Aer Rianta to enter a new partnership with ‘an ambitious, forward-looking airport’ that is seeking to collaborate with a global duty free operator to enhance the retail experience of international passengers at Auckland Airport.

 

He said: “From the moment we held our initial conversations with the team at Auckland, we recognised a shared vision about placing the passenger at the heart of the airport retail experience and about enhancing that experience with an exciting retail offer.

 

“We will bring to Auckland our global experience of successful airport retail operations and airport partnerships.”

 

 

 

ARI DELIGHTED WITH THE WIN

In conclusion, Auckland’s Barker thanked both DFS and JR/Duty Free for their participation and ‘for being great business partners’, giving excellent service to Auckland’s passengers for many years.

 

Separate from this main statement ARI’s MacGowan said the company’s seven-year concession agreement will cover 2,300sq m of retail space across both arrival and departures areas and he added: “Drawing on our wealth of international expertise we will deliver a top quality travel retail experience that will delight New Zealanders and international visitors to the country.”

 

Auckland International Airport handles about 15 million passengers per year and is served by more than 20 international airlines. More than 70% of all visitors to New Zealand leave or enter the country via Auckland Airport.

 

But amidst all this celebration, there was disappointment expressed by JR/Duty Free Chairman Garry Stock, who confirmed that the incumbent retailer had withdrawn from the whole process last Monday.

 

 

 

JR BLAMES ‘ONEROUS CONTRACT’

 

He said: “This decision was prompted by the high level of uncertainty and a very onerous contract, which together took the level of risk too high.

 

“It was a sad and difficult decision, given the huge impact JR/Duty Free has had on the duty free landscape at Auckland Airport, and the close positive working relationship we have shared with the Management and Operational Teams of Auckland Airport,” he said.

 

“We wish the new incumbents, LS travel retail and Aer Rianta International every success as they develop their business in Auckland. We thank all our staff at Auckland for their outstanding service to our customers in building a business which drove duty free at Auckland Airport to the highest of standards.”

 

Stock added that the retailer remains committed to its other duty free businesses in New Zealand at both Christchurch and Wellington airports.

 

BACKGROUND: Auckland Airport has had a mixed history with its competing dual duty free retail operator offering, having even tried to do away with it all together back in 2008 in favour of a single duty free retailer.

 

However, AIAL subsequently decided to retain its dual operator system rather than face the prospect of an extended dispute with the New Zealand Commerce Commission which was certainly imminent at that time.

 

Clearly, DFS Group would have paid AIAL a lot more for the whole duty free departure and arrivals business if it had been on offer, but this was not to be.

 

James Richardson subsequently opened for business in competition with DFS Group At Auckland Airport in July 2009, after buying out all of Nuance New Zealand’s business operations a few months earlier.