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New duty free operators chosen for Auckland International Airport

RBR Staff Writer Published 20 February 2015

New duty free operators Aer Rianta International of Ireland and LS Travel Retail Pacific of France have been chosen, on the basis of an international tender, to replace JR Retail and DFS at Auckland International Airport (AIA) from July 2015.

The decision was revealed after the airport operator reported a half-year net profit of 8.1% to $NZ92.8m ($95.6m) on Friday.

At last year's annual meeting of the airport company, the existing duty free retailers have been criticised for their hard sell tactics. The new operators' licences would have a validity for a minimum of seven years.

While there was a 5.4% rise in revenues, total retail income grew by only 1.6% though the number of passengers increased by 3.8%, indicating a decrease in passenger spending.

The decline could be put down to New Zealand cutting the allowance for duty free tobacco from November and trans-Tasman passengers buying in Australia instead of New Zealand as a result of a slightly negative impact from a high New Zealand dollar.

According to AIA chief executive Adrian Littlewoood, passengers will be encouraged to purchase through 'click and collect' before arriving at the airport, while a bigger collection of brands will be added to the portfolio.

The new tender could see a rise of $NZ5m in gross earnings for fiscal 2016, as per AIA statistics. The floorspace assigned to duty free shops in 2017 would have grown by over 30%.

Major growth has been attributed to Asian passengers who are the biggest patrons of duty free shops.

On the other side, Sydney Airport too changed its duty free operator, calling in Heinemann this week, and reported a rise of 1.4% in international traffic, but domestic traffic fell by 1.7%, in January.

Overall, it was a 0.5% fall in traffic when compared to January 2014. Although the airport showed a 5.1% rise in Australian passengers despite the Aussie currency coming down.

A division of Lagardère Services, LS Travel Retail Pacific has a presence in over 30 countries covering North America, Europe, Asia and the Pacific, with 4100 plus outlets worldwide, including 150 airports.

Aer Rianta International, which opened the world's first duty free liquor store in 1947, at Shannon Airport Ireland, stands as the inventor of duty free shopping. It has a turnover of over $1bn.