Contest narrows in race for Melbourne Airport duty free contract; decision soon

By Luke Barras-hill |

Following a review undertaken by the airport, three retail operators will now vie for the Melbourne Airport Duty Free contract. Source: Shutterstock.

A trio of retailers have been shortlisted for the coveted duty free contract at Melbourne Airport’s (MEL) International Terminal, TRBusiness can report.

The three-strong lineup follows bid submissions from ‘six of the largest duty free operators’, though the airport remains tight-lipped on the final contenders.

It is gathered that the landlord initially received 12 submissions following the release of a request for proposals (RFP) earlier this year, with this number whittled down to six before the final three bidders were selected.

A signed contract, pending confirmation of the Board’s recommendation, is anticipated this month with an official announcement due thereafter.

Ten-year term likely

The contract is expected to be awarded on a 10-year term, subject to the Board’s approval.

Dufry is the current long-term incumbent, with its lease set to expire at the end of May 2023 ahead of the new duty free licence beginning on 1 June 2023 [Dufry-owned Nuance previously inked a three-year extension to its lease in 2016, which preceded the transformation of the duty free shops across T2 including a substantial luxury concession footprint – Ed].

Andrew Gardiner, Chief of Commercial – Property & Retail, Melbourne Airport, told TRBusiness: “We were blown away with the quality of the proposals we received from all of those operators – absolutely phenomenal. The amount of work that goes in… I take my hat off to all of them.

(Pictured and below) Dufry is the current duty free licence holder at Melbourne Airport. The travel retailer’s lease is due to expire at the end of May 2023.

“There are a couple that are unbelievable. We are very pleased, especially coming through the pandemic to have six highly respected operators. They’ve done some great work.

“We questioned ourselves on whether it was the right time to go to market; given we’ve done the right thing commercially, the interest was great. It’s incredibly exciting.”

The tender invited physical and digital proposals from potential partners by 16 September, with the airport discussing the opportunity with them during the TFWA World Exhibition & Conference in Cannes.

The development caps a busy 14 months for the airport, having issued two F&B RFPs across Terminal 4 and part of Terminal 3, and at Terminal 1.

According to its latest traffic figures, a total of 2.6 million passengers passed through MEL’s four terminals in October – the highest monthly figure since the beginning of the pandemic.

That represents 78% of the 3.3 million passengers recorded in October 2019, with international travellers at 65% of pre-pandemic levels and domestic travel at 83%.

Retailers reacted with elation after Australia reopened its borders to international travellers on 21 February.

Stay close to TRBusiness for an in-depth interview with Melbourne Airport Chief of Commercial – Property & Retail Andrew Gardiner and Head of Retail and Asset Management Aaron Gupta.

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