JR Duty Free has won the Tel Aviv Airport duty free contract, guaranteeing $169m a year, or +$1.1bn over seven years.

 

This bid is equivalent to approximately 47.5% of the total revenues over the seven-year contract, based roughly on the Israel Airports Authority estimate that the duty free concession generates around $1m a day at the location.

 

The incumbent operator of many years, James Richardson will now continue to operate the stores for a further seven years in the core retail categories of Liquor, Tobacco, Perfume, Cosmetics, Confectionery and Drugstore.

 

In its usual (and refreshing) transparent fashion, the IAA also reported that James Richardson’s sales turnover at Ben Gurion Tel Aviv Airport reached $343m in duty free retail sales alone in 2012 and it will now continue to operate all shops under this contract comprising some 3,300sq m in sales area.

 

 

As mentioned, the IAA says that Ben Gurion is among some of the world’s top airports in duty free, generating an average of approximately million dollars a day.

 

The IAA added: “Terminal 3 is considered one of the prettiest and most modern terminals in the world and leads the world in service.” It adds that the terminal has won awards for excellence in service quality in both surveys and passenger satisfaction for five consecutive years from the International Civil Aviation Organization (ICAO).

 

The award of this tender follows an earlier mid-bid court challenge from JR Duty Free (James Richardson) against some of the terms of the tender back in June, but this was dismissed.

 

Just over 12m international arriving and departing passengers used Tel Aviv Ben Gurion Airport in 2011, compared with around 11.5m in 2010 – a near 10% record increase on the previous year.

The leading visitor markets by destination of origin in 2012 were the US, Germany, Russia, France, UK, Italy, Spain, Switzerland, Ukraine, Turkey and Austria.

According to Yoram Shapira, Deputy Director General – Commerce and Business Development, Israel Airports Authority (IAA) there are already “force majeure” measures deliberately built directly into the contract to assist its retailer in the event of any major unseen external pressures emerging during the course of the contract term.

He said earlier this year: “I can tell you that we have a solution if the traffic drops, because the concession fee drops in parallel. There is also an exit clause if there is any problem, so there is a solution to that so that companies know,” he said confidently.

As one of the world’s biggest ‘duty free contracts’, JR Duty Free’s perfume and beauty sales alone account for well over $130m a year. The retailer also operates the 880sq m Sports Shop Tender at Ben Gurion Airport, Tel Aviv, having won the reissued seven-year contract – with a two-and-a-half year option – back in October 2011 in a JV with the MGS Moliev family].

 

 

A detailed interview with Yoram Shapira, Deputy Director General – Commerce and Business Development, Israel Airports Authority (IAA) covering all main aspects of this tender before it was awarded, including sales and other important data can be found here: [http://www.trbusiness.com/index.php?option=com_content&view=article&id=12461:tel-avivs-364m-duty-free-business-goes-to-bid&catid=5:middleeast&Itemid=14].