The deadline for accepting all duty free offers for the new $1.8bn Muscat International Airport duty free contract is next week (1.12.2015), while the Abu Dhabi Airports Company is expected to close its duty free contract submission deadline for the new $3bn Midfield Terminal towards the end of December/early January.

Neither the Abu Dhabi Airports Company (ADAC) or Oman Sales & Services are commenting on the tenders, except to advise that they are ‘imminent’, although the quality of retailer participation for both is expected to be high.

DFS Group is currently the duty free operator at Abu Dhabi International Airport (since 2008), while Muscat International Airport’s duty free contract has been operated by the 50/50 joint venture company between Oman Air and Aer Rianta International Middle East since 2003 [Muscat Duty Free is the trading name of Oman Sales & Services LLC-Ed].

This is the single biggest investment that the Emirate of Abu Dhabi has ever made in the airports arena and it is also one of the most ambitious in the world.

One of the last official pictures released charting the construction progress of the new $3bn Midfield Terminal. This was taken back in July 2015 and construction is now nearly 70% complete with the opening expected in or around July 2017.

ADAC originally issued news of its ‘high-tech tender’ way back on May 6 2014, with interested parties telling TRBusiness that it has been an extremely well-run and professional process – if not somewhat prolonged. However, more recent delays in the submission process have tested the patience of one or two prospective bidders.

As one said recently: “The delay is a little disappointing after all the good information and all the professional presentations”.  Another said that the process also has cost implications, because the result could impact on future planning, cash flow resources and strategic focus.

Having said that, there is much consistently correct behaviour to be admired in relation to the Abu Dhabi bid. For example, no members of its team were present in any shape or form at the recent TFWA Cannes or Meadfa events. This was a deliberate effort to ensure that none of its executives could be accused of having any conversations with any party that might be misunderstood or misrepresented in any way while the bid process remained ‘live’.

As reported at the outset, ADAC has also been transparent about the scoring criteria it will use for the various packages on offer, with the tender pack itself ‘designed to be as spectacular as the terminal itself’.

This contained a ‘retail vision’ book for the Midfield Terminal commercial space, as well as artistic renderings of how the interior of the building might look. There was even a fully loaded iPad containing innovative technology, animation and augmented reality renderings.

Another artist’s view of the Midfield Terminal as envisaged at night. Abu Dhabi International Airport’s first half passenger traffic growth grew by plus-17.2% this year, comparing very favourably with the 19.2m passengers recorded in the full year 2014 (+21.2%).

In fact, many regard this Abu Dhabi duty free bid process as a model tender, with seemingly no complaints about the quality or professionalism of the process itself right from the outset. This aside, it is also a business that interested retailers believe will grow significantly in future – with good reason based on recent sales and traffic achievements.

The existing operation managed by DFS was worth more than AED1bn ($272m) last year, corresponding to a rise of 10.5% on the previous year from just over 8,000sq m of retail space.

The incumbent for seven years, DFS obviously knows the existing business better than any other retailer at this point in time and it has to be said that it has also performed extremely well at the location. This includes lifting sales from less than $100m when it took over, to just under $300m inside seven years – an achievement that has certainly not gone unnoticed by ADAC management.

Acting Chief Commercial Officer at Abu Dhabi Airports Company Dan Cappell spoke to TRBusiness recently on the basis that we agreed not to touch upon the airport contract process while it is still ‘live’.

As reported, ADAC generated sales +10.9% to Dhms.707.6m/$192.6m in the first half of this year, so surely ADAC must be looking at an all-time record this year, we asked?

Cappell said: “We have continued to grow year-on-year every year since DFS took over the duty free concession. This is despite the challenges imposed by international economic factors, such as the change in Chinese spending habits, the falling rouble and the same for the euro.

DFS has grown duty free sales from less than $100m when it took over the commercial umbrella concession seven years ago [contract extended in January 2013-Ed], to just under $300m last year and is on target for another record sales performance in 2015, according to ADAC management.

Abu Dhabi has also kept up the pace when it comes to passenger traffic this year, with first half growth of plus-17.2%, comparing very favourably with the 19.2m passengers recorded in full year 2014 (+21.2%).

Cappell also confirmed that the new $3bn, 700,000sq m Midfield Terminal construction programme is now more than 60% complete, with a target to reach 70% by the end of 2015. The general consensus now is that the initial 30m-passenger capacity building is expected to open for business in or around July 2017.

[An in-depth interview with Dan Cappell on the huge progress made in the business in recent years appears in the November print issue of TRBusiness-Ed].

An artist’s rendering of the new $1.8bn Muscat International Airport where the deadline for duty free offers is next week (1.12.2015). This will be followed by a specialty retail tender.

By comparison, the Muscat International Airport opportunity may be a lot smaller, but it is still very attractive to many companies and Aer Rianta International is expected to defend it vigorously as the long-time incumbent joint venture partner. Gebr. Heinemann and several other companies are also expected to show good interest, with the winning bidder expected to be announced in late January or early February.

[The Heinemann joint venture ATU Turizm Isletmeciligi A.S. – TAV and Unifree – already operates the 10-year Salahah Airport duty free contract in Oman, comprising a 727sq m duty free departure store and a 117sq m arrivals outlet in what is the small country’s second-largest airport-Ed].

Meanwhile, the Muscat operation has delivered annual sales turnover levels in excess of $50m in past years and also includes an Internet cafe at Port Sultan Qaboos, plus the management and operation of the Oman Air in-flight duty free operation. When the new airport opens it will replace the existing 41-year old facility with a terminal building comprising a total gross floor area of 344,995sq m.

The new terminal will also be able to handle 12m passengers a year and A380 aircraft, with Oman Airports Management Company (OAMC) also confirming that further expansions in three subsequent phases will boost annual passenger capacity to 24m, 36m and 48m respectively.

Retailers who are understood to be interested in the Abu Dhabi business – and/or some in the Muscat duty free contract and its additional specialty retail business – include DFS Group, Aer Rianta International, Dufry, Gebr. Heinemann, Lagardère Travel Retail and others.