Isavia will tender approximately 9,000sq m of non-core duty free retail and F&B space at Keflavík International Airport next year as it embarks on a major extension of the airport’s terminal, TRBusiness can reveal.

As the gateway to Iceland, Keflavík Airport handled 8.8m passengers last year and expects this to rise to 10.3m in 2018.

Responding to the hike in pax demand, Iceland’s state-owned airport operator plans to almost triple the size of its terminal in the coming years, including a 5,000sq m phase one extension of the main commercial hall, set to open in 2021/2022.

“Along with that tender, all current F&B units and most special retail units will also be tendered out,” comments Isavia Commercial Manager Gunnhildur Erla Vilbergsdóttir.

“Therefore in total, Isavia will be tendering around 9,000 commercial sqm in 2019 in the whole terminal. At this point, we are deciding on the mix we will be tendering.”

ISAVIA EYES ‘OPTIMAL TRADING’

Currently, Keflavík’s duty free business trades as Duty Free Iceland, a subsidiary of Isavia.

It operates large stores in departures and arrivals, in addition to two other shops serving transfer passengers to Schengen and non-Schengen area countries.

For the traveller, there are particular advantages in shopping at Keflavík Airport as all retail – including speciality and food & beverage – is classed as tax free and duty free, providing real price advantages.

Vilbergsdóttir tells TRBusiness that no decisions have been made at present to change the current tax and duty free concession by way of inviting future proposals of interest from international travel retailers.

However, she says the operator is ‘constantly evaluating’ its optimal trading model.

“With the steep growth in recent years from different markets and future expansion ahead we look at different business models seriously,” she noted.

Other concession partners at the terminal include Lagardère Travel Retail Iceland, which won a major food & beverages contract at the departure lounge in 2014 when LS Travel Retail (as it was known at the time) joined forces with Icelandic operator NQ in a joint venture.

The travel retailer operates eight units in the terminal – seven restaurants and a gourmet food outlet.

Isavia handles the operation and development of a number of airports in Iceland including Reykjavík, Akureyri, Isafjordur, Husavik, Grimsey, Torshavn and main hub Keflavík including its Leifur Eiriksson Terminal.

Additionally, it manages air traffic in Iceland covering Reykjavík and Keflavík Airports and the domestic and surrounding Oceania area.

ACI COMMERCIAL HOST 2019

The developments are timely, as Isavia prepares to host next year’s ACI Europe Airport Commercial & Retail Conference & Exhibition [see below video for a preview].

“We are extremely excited about hosting the 2019 ACI Europe Commercial & Retail event in Reykjavík Iceland,” comments Vilbergsdóttir when asked about the opportunity.

“Our goal is to deliver very high-quality speakers and learnings as well as providing participants the opportunity to get a sneak peak of the best Iceland has to offer. “We feel that the industry is very excited about visiting Iceland.”

Keflavík Airport’s traffic has grown by 80% in the past three years, according to ACI Europe and the development story is certainly set to raise interest into the future.

“In recent years we have focused on investing in technology to bring passengers faster through processing,” adds Vilbergsdóttir.

“That goes for automated check-in and self-bag drop, updating all security lanes and installing self scanners at boarder control. With the steep passenger growth in recent years, we would have faced big problems with passengers getting stuck processing and not being able to spend time and money at the airport.”

To read the full interview, watch out for the October issue of TRBusiness, available at the TFWA World Exhibition & Conference, 30 September – 5 October.

The 28^th Commercial & Retail Conference & Exhibition takes place in Harpa, Reykjavik, Iceland, 18-20 March.