United Airports of Georgia LLC is to issue a duty free tender for two airside locations in the departures hall at Kutaisi International Airport.

Total available duty free space spans 568sq m, of which 420sq m (a walkthrough duty free zone) is located directly after passport control. A further 148sq m is situated close to the boarding gates. Each space is expected to have a different name and offer diverse concepts. The smaller location should also be devoted to Georgian products.

Both spaces are located in the existing terminal which is currently being renovated. The renovation is part of a terminal extension project which is scheduled for completion in April 2021.

Tamara Archuadze, CEO, United Airport of Georgia LLC told TRBusiness: “Commercial space in the existing terminal is three-times less than the space planned for the extended terminal.

“An extension of the existing terminal will add c. 1,000sq m of commercial space to the airport, while total commercial space in the extended terminal will amount to c. 1,300sq m.”

The only low-cost hub in the Caucasus region, Kutaisi Airport serves European low-cost carriers Wizz Air and Ryanair. The airport also handles a high percentage of leisure travellers (solo travellers, cultural seekers and holiday travellers).

Last year, the airport served up to 900,000 passengers, with more than 70 direct weekly flights to and from Europe’s top destinations. Kutaisi Airport has the highest number (c. 30) of direct European routes in the region.

ONLINE AUCTION

In recent years, there has been a 50/50 split between foreign and Georgian passengers. Last year, the airport registered the second-highest increase in passenger flow of any European airport, which welcomes less than five million passengers annually. This is according to Airports Council International.

Beginning early next month, the duty free tender will take the form of an online auction. Participants will bid electronically via an online platform with the highest bidder eventually winning.

The tender will be a ‘transparent and fair selection process’, ensuring qualified domestic and international operators have equal opportunity to succeed. An independent auditor will set the initial bidding price which will be announced by the airport authority.

A contract spanning at least five years will be on offer with a two-year extension option.

Regarding the monthly rental structure, 25% of revenue will come from the sale of goods, while the amount paid must be no less than the price set by an independent auditor.

The winning retailer must provide documents proving its experience of operating duty free shops before signing the contract.

Interested parties are encouraged to contact the airport authority before the tender begins should they have any concerns relating to the tender terms. This will ensure their points are considered when the tender is drafted.

Online auctions are commonly executed by the United Airports of Georgia LLC for commercial tenders. The company told TRBusiness it is particularly flexible with partners, especially taking into account the impact of the coronavirus (Covid-19) pandemic.

Archuadze commented: “The operator will be chosen according to the online auction results. The company which offers the highest minimum annual guarantee wins, however, the auction terms will include important criteria that has to be satisfied, such as the experience of the operator.”

ATÜ Duty Free (the joint-venture between TAV Airports Holding and Unifree Duty Free/Gebr. Heinemann) has been the incumbent duty free operator at the airport since 2014, when it opened a 148sq m duty free and travel retail store. The retailer also runs stores elsewhere in Georgia at Tbilisi and Batumi Airports, which are operated by TAV Airports.

On the prospect of ATÜ Duty Free participating in the tender and continuing operations in Kutaisi, Archuadze said: “All interested parties, including ATÜ, are welcome and will have the opportunity to participate on equal terms in a public online auction. The process will be fully transparent.”

CURRENT DUTY FREE STORE

Located after passport control in the existing Kutaisi Airport terminal, the current ATÜ store is the sole retail outlet. The remaining commercial spaces are dedicated to food and beverage. Further food and beverage opportunities will be available in the extended terminal with tenders set to be issued next month or in January 2021.

Customers visiting the ATÜ store can purchase classic duty free products, international brands and Georgian wine.

Outlining the reasoning behind the terminal extension project, Archuadze (pictured left) explained: “Kutaisi International Airport experienced a 42% increase in passenger traffic in 2019, compared to the previous year.

“With traffic growing sharply, United Airports of Georgia decided to expand the current terminal and offer various services to passengers.”

In addition to passenger growth, the airport also reported a duty free revenue increase of 30% in 2019 compared to the previous year.

Outlining United Airports of Georgia’s commercial vision for Kutaisi Airport, Archuadze emphasised that the new renovated and enlarged terminal will be able to offer around three-times more commercial space.

“With the help of the new terminal, which will occupy nearly 25,000sq m, we will not only be able to customise products and services, but offer several varieties.”

Over the past five or six years, the airport authority has been in close contact with travellers to understand their needs and preferences. Information has been aggregated in order to deliver customised offers and plan locations for commercial spaces.

She concluded: “We have also considered other important factors such as customer flow in the airport, waiting hours and the expected behaviour of travellers at certain locations.

“By creating more choices for our travellers, we also count on fair competition between businesses. This will guarantee increased quality of products and services and fair prices.

“We believe carefully planned commercial spaces will not only guarantee customer satisfaction, but also ensure an attractive business environment.”

Interested parties in the upcoming duty free and food and beverage tenders are invited to email [email protected] for further information.

*All images courtesy of United Airports of Georgia LLC.