Bangalore International Airport Limited (BIAL) has outlined its commercial plans for the new Terminal 2, the first phase of which is due to open in 2021.
At the start of the year, BIAL, which operates Kempegowda International Airport (the first Greenfield Airport in India to be built as a public-private partnership), revealed details of a Rs13,000 crore capital development programme.
This includes a new 255,000sq m terminal, second runway, expanded access roads and internal road infrastructure, utilities and a new multi-modal transport hub.
The new and existing terminals will be separate with all international flights departing from Terminal 2, which will have capacity for over 45 million passengers.
COMMERCIAL PLANNING BEGINS AS T2 BECKONS
In the 2018/2019 fiscal year, BLR handled 33.30m passengers, an increase of 23.8% year-on-year. Domestic traffic, the main growth driver, accounted for 28.82 million passengers, while international traffic grew +17.5% to 4.48 million
Speaking to TRBusiness during a visit to BIAL’s headquarters close to Kempegowda Airport, earlier this year, Kenneth Rosvang Guldbjerg, Chief Commercial Officer said: “The new facility will be an integrated domestic and international terminal with commercial space of around 22,000sq m in phase one. This will grow to 40,000sq m in phase two.
“The entire commercial space planning strategy we have laid down encompasses different zones. These include Ultra-Luxury and Luxury Zones.”
In departures, the Ultra Luxury Zone will have six stores spread over 505sq m. Cartier, Chanel, IWC, Hermès and Dior are among the targeted brands. The Travel Value Zone will comprise four stores, spanning 1,981sq m, while the Luxury Zone will feature nine stores across 683sq m. Targeted brands for the Luxury Zone include Ferragamo, Tag Heuer, Bally, Prada, Dolce & Gabbana, Armani, Gucci, Burberry, Coach and Omega.
The Premium Speciality Retail Zone will be have 12 stores spread over 806 sq m. Several brand options are being considered, including a multi-brand DFS store and Swarovski/Paul Smith, Michael Kors, Tommy Hilfiger, Hugo Boss, Jonathan Adler and Tiffany & Co outlets.
In the common arrivals area, there will be three duty free stores totalling 363sq m and one 50sq m external retail kiosk, for which WH Smith, Relay and Croma are the targeted brands. Six speciality retail shops will also be part of the arrivals offer, spread over 173sq m. Hamleys and Johhnie Walker are the brands being targeted.
Guldbjerg, who reveals there will be more than 180 stores in the new terminal added: “Our mission with the opening of Terminal 2 is for Bangalore Airport to be one of the preferred destinations for retail, entertainment and dining.
“We want to achieve this by ensuring each customer touchpoint will be a point of engagement rather than a point of sale. The journey from a point of sale to point of engagement will go through point of excellence and point of experience.”
At present, the incumbent duty free operator is Dufry Group, whose contract will expire once the new terminal opens. Guldbjerg explained: “We will have a separate tender for the new terminal. The entire Terminal 2 commercial space will be tendered out. The Terminal 1 duty free contract will end as soon as Terminal 2 opens.”
The decision to tender the entire Terminal 2 commercial offer will benefit the airport and passengers. “This will help obtain plenty of local world-class homegrown brands. With most duty free stores worldwide offering the same products, it is all about brands and brand engagement. India is going through a huge transformation on this front.”
Currently, BIAL is planning to issue the first set of Terminal 2 tenders (including duty free) in January 2020 and has told TRBusiness it would welcome joint ventures. “There will be anchor brands, concept stores, exclusive outlets and multi-brand shops.
“Multiple operators and different operating set-ups, depending on the concept are also an option,” Guldbjerg remarked.
Different contracts lengths and terms are also on the table. “We are a little dependent on the investment of brands and their sustainability. For a brand like Chanel, for example, which we are keen to bring to Kempegowda Airport, we could possibly look at a 20-year contract or even longer.”
Looking ahead to the opening of the new terminal, the priority is to create experiences and memories. Guldbjerg reiterated: “If you make points of sale there is no fun in the game. It is all about global exposure with local expertise.”
DUTY FREE DRIVES COMMERCIAL GROWTH
Whether in Terminal 1 or the new Terminal 2, the importance of the duty free business must not be underestimated. This is because duty free is is among the key commercial growth drivers at any airport, Kempegowda included.
“Our duty free business is growing exponentially at double-digits year-on-year. Each year, we keep trying to add new concepts. This year, for example, we have opened World of Whiskies in arrivals and will soon be adding World of Chocolates in arrivals as well.
“The opening of a duty free electronics and gizmo store in partnership with Flemingo is part of the next stage of redevelopment in departures.”
Guldbjerg added: “Liquor and perfumes and cosmetics are the key growth drivers and we are starting to increase this portfolio in departures. Each year, we are adding anchor brands to the duty free profile to enhance the customer experience over there.”
Amid all development plans in the existing Terminal 1 and new Terminal 2, increasing transaction values is priority. “There is still a lot of work to do on this front and the opportunity to drive spend per passenger and average transaction value.
“We are constantly working to increase spend per passenger and average transaction value by raising operating efficiency, optimising the commercial footprint and creating anchor brands. In our mom-n-pop-shops, for example, we are moving to a little bit of a luxury environment. This creates a destination in itself and drives up the transaction value.”
With plenty of brainstorming going on as to how to improve commercial business inside the airport, the retail and dining experience is going from strength to strength outside. Last December, BIAL launched The Quad by BLR, a new retail and F&B plaza comprising more than 20 outlets.
Situated in front of arrivals, The Quad has four zones to keep customers engaged. These are Retail, F&B, Flea Market and the Arena. Operating round the clock, shoppers can explore a range of brands including Superdry, Hidesign, Toyport by Lego, Auromonde and Gajet Plaza.
F&B outlets include Barley & Grapes Café, Windmill Craftworks, Café Azzure, House of Kebabs, The Wok Shop, Burrito Boys, Doner & Gyros, Frozen Bottle and Great Foods of India.
A centrally-located LED video wall and arena also draws customers in with live performances including plays, musicals, poetry/book readings and concerts.
“Quad by BLR is an incredible project which was conceptualised in a record time of three months. We started in October 2018 and opened around December 2018,” emphasised Guldbjerg, who revealed some of the stores have been developed from discarded containers taken from the port.
He added: “We have concerts almost every weekend and live screenings of sporting events. It is a cool and chilled out environment.”
Built in an area of around 5,000sq m, the piece of land was temporarily available for 18-24 months before construction of the new terminal begins. Guldbjerg explained: “We are building a new terminal, so there is an access road being constructed in that area.
“There were two options. One was to keep it idle and wait for construction to begin. The other, was to do something interesting and maintain the best possible customer experience.”
See the October issue of TRBusiness for more from our exclusive on location interview with Kenneth Rosvang Guldbjerg, Chief Commercial Officer, Bangalore International Airport Limited.
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