THURSDAY 21 JUNE 2007

WELCOME to The Moodie Report.

FAST, FACTUAL, FREE PERSONALITY OF THE WEEK

This week’s edition was spawned in London Heathrow T4 and Basle Airport. During my pretty much non-stop travels during the year I always try to see our industry through the eyes of the consumer. That’s not difficult – I spend regularly in the airport environment, from the newsagents to the duty free to the foreign exchange and the food & beverage offer. On Wednesday, travelling through those two European airports, I came into conversational contact with six different employees representing the human face of our business – at T4 that involved the Travelex counter, WH Smith, the liquor & tobacco store and Cigar House. At Basle I met Frank (more of him later) and a young lady at the cash point. All were friendly enough, though the staff at WH Smith are so used to dealing with queues that sometimes they barely look you in the eye. But two at T4 made a real difference: one was the friendly trainee at Travelex, who explained the buy back guarantee concisely and well (and sold me something I had not intended to buy); the other was a thoroughly likeable chap called Eric at World Duty Free’s Cigar House. When buying cigars I always like to test whether the staff are knowledgeable about a product that benefits hugely from such awareness. Eric was. I said I needed a five-pack of medium Cuban cigars. He showed me a nice range of Habanos and – because he knew what he was talking about, and because the price and the ambience were good – I bought some Cohibas and some Montecristos too. In short he doubled my spend. And before he put the cigars in the World Duty Free bag he first put them in a plastic bag and sprayed it inside with mist. “The air in the planes dehydrates the cigars,” he explained. “This will help.” As I complete this report on the late, late shift (the boss drives me hard) I’m drawing on one of those Montecristos and wondering how many spends Eric doubles during a working week. I’m willing to wager that it’s many. At Basle Airport Eric’s (non-specialist) counterpart was Frank. Not quite as knowledgeable about cigars, understandably, but he more than compensated with his enthusiasm. “I’ll have five of those,” I said pointing to some nice Montecristo Petit Turbos. Frank pulled out five packs. “No, just a packet of five,” I replied, feeling cheap. But Frank wasn’t letting me off that easily. “These are my favourites, wonderful cigars,” he said, pointing to some healthily priced Trinidads. What could I do in the face of such exuberance? Spend doubled again. And there was still time before the flight to check out the wine selection. That Alsatian Riesling looked great value at €9. But how would the 2004 be drinking? “That wine is wonderful. Drink it with your wife or girlfriend, they’ll love it.” Yes, it was Frank again, appearing on my shoulder like a duty free guardian angel. Up went the spend… So here’s to Eric and Frank. Personable, knowledgeable staff, and decent space given to luxury categories – it’s not rocket science, but it’s certainly not the norm either. And whether its cigars, high-end skincare, fine wines or luxury watches, it works every time.

Image Image of of the the Week Week A nice story from US airport specialist retailer Hudson News which celebrated ‘Juneteenth’ (19 June), commemorating the day that the last American slaves were informed of their emancipation. Hudson appropriately showcased great African-American authors, from Toni Morrison to Richard Wright to the man who would be President, Barack Obama.

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Alexander Schoppmann: The COLM MCLOUGHLIN: THE DUBAI Moodie Report interviewed the DUTY FREE MANAGING DIRECTOR irrepressible founder of the THIS WEEK ANNOUNCED A NEW world’sSALES first airline for smokers, DAILY RECORD OF US$4.9 SMINTair, this MILLION, POSTED week. We were as ON THE RETAILsurprised and ER’S 22ND impressed by him ANNIVERSARY. as we think pasWHAT A sengers will be by PERFORMANCE – the inflight ambiSOME +57% AHEAD THE ence andOFthe duty PREVIOUS 24-HOUR–RECORD. free shops onboard no trolleys allowed and luxury all the way. Dare we say that he’s a breath of fresh air? QUOTES OF THE WEEK

“It is growth unlike anything we've ever seen anywhere in recent history.” Pacific Asia Travel Association President and CEO Peter de Jong underlines the phenomenal +580% rise in outbound travel from mainland China over the past decade. “About 70% of passengers will come down those escalators and we will be ready. If we can’t sell to people who can’t leave the building, then there’s something wrong with us.” World Duty Free boss Mark Riches says captive will spell captivated at Heathrow T5 when it opens next year. (Hear more on The Moodie Podcast.)

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DATA ROOM – TRAFFIC NEWS

HONG KONG. Hong Kong Inter-

Selected traffic numbers reported in the past two weeks Country

Airline/airport

May ’07 vs May ’06 (%)

Australia Australia Belgium Canada Chile Germany Germany Germany Iceland France France Hong Kong Malta Norway Peru Slovakia Slovakia Sweden Switzerland Thailand Turkey UK UK UK US US US

Perth Airport Sydney Airport Brussels International Airport Ottawa International Airport LAN Airlines Berlin Schönefeld Airport Berlin International (Tegel) Airport Frankfurt Airport Keflavik Leifur Eiríksson Int. Airport Paris Charles de Gaulle Airport Paris Orly Airport Hong Kong International Airport Malta International Airport Oslo Gardermoen Airport Lima Jorge Chávez Airport Kosice Airport SkyEurope Stockholm Arlanda Airport Geneva Airport Bangkok Suvarnabhumi Airport Antalya Airport T1 Birmingham International Airport Bristol International Airport Glasgow Prestwick Int. Airport jetBlue Airways Northwest Airlines Hawaiian Airlines

+19.1 (international) +4.4 (international) +2.5 (total pax) +7.8 (international) +34.2 (international) +9.1 (international +5.7 (international) +0.6 (total pax) +9.9 (total pax) +1.2 (total pax) -0.5 (total pax) +7..5 (total pax) +6.1 (international) +6.0 (international) +29.7 (total pax) +29.1 (total pax) +40.4 (total pax) +1.1 (international) +7.7 (total pax) +3.0 (international) +6.2 (international) -0.6 (international) -0.7 (international) +4.1 (total pax) +27.7 (total pax) -0.5 (mainline pax) +16.9 (total pax)

Source: ©The Moodie Report

Thursday 21 June 2007

continued on page 3

national Airport enjoyed solid growth in May, with passenger volume increasing by +7.5% over the same period last year to 3.81 million. For the 12 months ended 31 May 2007 passenger traffic reached 45.6 million, +7.8% higher than year-earlier figures. Air traffic movements grew +4.2% to 285,000. Airport Authority Hong Kong CEO Stanley Hui said: “We saw strong visitor numbers in May, especially from Europe and the Mainland, where traffic was bolstered by the Golden Week holiday. “To meet the future increase in demand we are constantly enhancing our infrastructure and services. Terminal Two, which was officially opened earlier this month, is a prime example of our commitment to serving the people of Hong Kong and the Pearl River Delta with state-of-the-art facilities.”

INTERNATIONAL. Macquarie Airports this week revealed passenger traffic figures for May at its portfolio of airports, with Sydney Airport showing the strongest increases. Traffic at Sydney rose +6% in May compared to the same month last year, with domestic

traffic increasing by +7.2% and international traffic by +4.4%. In total the airport handled 2.4 million passengers in the month, including 720,000 international. Australian travellers increased +4% with solid growth from the UK (+1%), New Zealand (+12%), US (+5%), China (+7%), India (+16%), and France (+15%), while Korea was flat. Japan (-12%), Canada (-2%), and Germany (-1%) were the major markets that declined. Elsewhere, traffic at Copenhagen Airport rose +1.4% over the previous corresponding period (pcp) to 1.8 million passengers; the increase at Brussels Airport was +2.5% to 1.6 million passengers. At Rome Fiumicino and Ciampino combined, passengers rose +5.2% to 3.4 million, while traffic fell -0.8% at Birmingham to 830,000 passengers and at Bristol Airport the figure fell -2.7% to 510,000 in the month. Macquarie Airports CEO Kerrie Mather said: “Traffic across the portfolio was mixed during May with Sydney continuing to show strong growth with an increase of +6% on pcp. The decline in transfer traffic at Copenhagen masked the strong performance of origin and destination traffic, with domestic traffic rising +8.8% and international +4.2%. “The announcement of additional and new services to and from Sydney is very welcome news and reflects the anticipated capacity increases Moodie Interactive: Click on the image above

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Selected traffic numbers reported in the past two weeks Country

Airline/airport

April ’07 vs April ’06 (%)

Australia Canada Japan Japan New Zealand Panama Russia UK US US US US US US US US US US US

Qantas Vancouver International Airport JAL Group Osaka Kansai International Airport Air New Zealand Copa Airlines group Aeroflot East Midlands Airport Atlanta Hartsfield-Jackson Int. Airp’t Austin-Bergstrom Int. Airport Chicago O’Hare International Airport Ft. Lauderdale-Hollywood Int. Airp’t Houston Bush Intercont. Airport Las Vegas McCarran Int. Airport Los Angeles International Airport Miami International Airport Minneapolis St Paul Int. Airport New York JFK International Airport Newark Liberty International Airport

-8.7 (international) +0.8 (international) -2.6 (international) -2.2 (international) +6.8 (international) +15.2 (RPM) +15.9 (total pax) +20.8 (total pax) +7.8 (international) +7.3 (total pax) -0.4 (international) +6.6 (international) +2.6 (international) +8.2 (international) -0.1 (international) +0.4 (international) -9.1 (international) +7.3 (international) +5.2 (international)

Thursday 21 June 2007

ahead of the delivery of the A380s. Additional services to Shanghai are planned from August 2007 and to Los Angeles and Johannesburg from March and November 2008 respectively. A new direct service to Santiago (Chile) was also announced from November 2008.”

NEW ZEALAND. The Japanese visitor market continued to be soft in April, with arrivals to Auckland International Airport down by -16.1% year-onyear to 4,816. For the financial year to date (ten months completed), the Japanese market was off by -15.2% to 73,813.

But there was better news from China and South Korea, both bigger visitor markets than the Japanese. Visitors from China rose +17.1% in the month to 10,302 and +24% for the first ten months to 77,370. This reflects the success of Air New Zealand’s Shanghai Source: ©The Moodie Report service, said Auckland International Airport Limited. South Korean visitors climbed by +12.3% in April to 6,492, and by a more modest +2.9% for the year to date to 69,717. Thai arrivals (+6.5%) and Malaysians (+18.0%) also rose sharply in the month. Overall international arrivals were up +1.2% and international departures +1.7% in April. New Zealand resident arrivals increased by +3.1%. However, April saw a decline for the major inbound markets of Australia (-1.1%), UK (-10.7%) and the US (-5.7%).

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DATA ROOM – TRAVEL & TOURISM NEWS

CHINA. The recent phenomenal growth in Mainland Chinese tourist numbers is set to continue for the next decade, and will have a major impact on global tourism numbers and revenues. That was the message from Pacific Asia Travel Association (PATA) President and CEO Peter de Jong, speaking at last week’s Tourism Forum 2007 in Hong Kong. He said China will capture more than 6% of total worldwide travel and tourism demand in 2007, putting it fourth among 176 destinations measured. Over the next ten years, growth is expected to double and China’s total travel and tourism demand is expected to be worth US$1.6 trillion. “With more than a million mainland Chinese visitors each month, Hong Kong is living evidence – and a grateful beneficiary – of this incredible growth,” said de Jong. “It is growth unlike anything we’ve ever seen anywhere in recent history. Over the last decade, for example – from 1996 to 2006 – outbound travel from mainland China has increased by a staggering +580%.” PATA attributed much of this growth to the Chinese government’s “proactive and practical” approach to travel and tourism. De Jong said: “This appetite has, in turn, stimulated travel demand to such a degree that it now impacts the global travel and tourism industry.” Moodie Interactive: Click on the image above

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Thursday 21 June 2007

PATA’s research suggests that, with inbound flows of 125 million last year and with outbound international movements of 34.5 million, this is only the beginning of the Chinese tourism boom. De Jong added: “We predict that total international inbound arrivals into China will exceed 146 million over the next three years alone. And with the recent announcement of a further opening of the travel market to foreign travel agencies next month, and plans to open domestic skies by 2010, these forecasts are now likely to be on the conservative side. “As impressive as they are, however, these international figures pale by comparison to China’s domestic travel movements each year. China currently generates +150% more domestic trips than the entire global international marketplace of travel and tourism put together. From 639 million trips in 1996 – that’s only a decade ago – the Chinese are now engaged in domestic travel to the tune of 1.39 billion trips last year.”

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DATA ROOM – RETAIL & COMMERCIAL SALES RESULTS

IRELAND. Dublin Air-

Dublin Airport Authority group turnover 2006 ARI 15%

Aeronautical 29%

Turnover split by category

€15

€5 €0

ARI

€10 €8.2 million

–€5 –€10

–19%

+23%

Commercial

€16.7 million

€20

GSH

€172 million

€22.5 million

€25

+8%

Aeronautical

€30

Great Southern Hotels (GSH) €35 6% million

€294 million

Commercial 50%

€35

Turnover (€ millions)

€90 million

€34.6 million

+25%

Change on 2005 by category

Source: Dublin Airport Authority

port Authority (DAA) has reported profits from normal trading activities of €69.5 million for the year ending 31 December 2006, an increase of +39% compared with the previous year. Overseas airport retailing arm Aer Rianta International (ARI), a DAA subsidiary, enjoyed another strong year. The profit contribution from ARI’s combined interests, including exceptional profits from the disposal of its shares in Hamburg Airport, increased by +12% to €19.5 million.

ARI and its equal joint-venture partner, Macquarie Airports Group, recently announced the sale of their combined 48% shareholding in Birmingham International Airport in the UK for £420 million to a consortium comprising Canadian and Australian institutional investors. The deal could be completed before the end of the year. Overall DAA profits after exceptional items amounted to €166 million. The exceptional items, with a combined net value of €96.5 million, comprised after-tax profits arising from the sale of the Great Southern Hotels Group (GSH) of €125 million and of the company’s 3% shareholding in Hamburg Airport (€3 million) less the after-tax cost of a restructuring plan at Shannon Airport (€31.5 million). Commercial revenues now account for 50% of group turnover, said DAA. Combined passenger numbers at Dublin, Shannon and Cork airports rose by +14% last year to 27.8 million. This represented the highest percentage increase for almost 20 years, and from a much higher base. Passenger numbers at Dublin climbed by 2.7 million to 21.2 million, the highest level of growth at any major airport worldwide. Shannon and Cork also achieved record passenger volumes, each rising by just over +10% to 3.6 million and 3 million respectively. Supported by higher passenger throughput, all key measures of profitability continued to move in a positive direction during 2006 including Group EBITDA, which rose by €34 million to €145 million. Moodie Interactive: Click on the image above

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DAA CEO Declan Collier said the company had strengthened its financial position through a combination of prudent management of costs, the continued success of its commercial operations at home and abroad, the successful disposal of the loss-making GSH hotels group, and the optimisation, through sale, of the value in some of the company’s overseas airport assets. But he added that further growth in profitability from normal trading activities was vital to meet the scale of the financial challenge facing the company. Collier re-affirmed that the planned separation of Dublin, Shannon and Cork airports required the completion of business plans that would assure the Government that each had a viable, commercial future. He said the recent restructuring agreement at Shannon, involving 185 voluntary redundancies and significant changes in working arrangements for remaining employees, represented a positive first step towards Shannon’s financial viability. DAA is preparing to begin building Dublin Airport’s second passenger terminal (T2), due for completion in 2009. A new Pier D will open this autumn.

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LANDLORD & CONCESSIONAIRE NEWS

AUSTRALIA/ITALY. Macquarie Airports (MAp) has confirmed that it has agreed to dispose of its 44.74% stake in Aeroporti di Roma (AdR) to Leonardo, a wholly owned subsidiary of fellow AdR shareholder Gemina SpA. The deal, conducted through Macquarie Airports Luxembourg (MALSA), involved a cash consideration of €1,237 million and is subject to competition authority clearance. Aeroporti di Roma controls Rome Fiumicino and Rome Ciampino airports. MAp, through its direct and indirect interests in MALSA, has a 34.2% beneficial interest in AdR. MALSA acquired its interest in AdR for just €480 million in March 2003. MAp CEO Kerrie Mather said: “Upon completion MAp will have achieved an excellent return on its investment in AdR. We believe that it is an attractive offer and is in the best interests of our security holders to accept. We will now focus on our remaining portfolio of high quality assets, where MAp, in conjunction with other Macquarie-managed funds, has majority interests. We are embarking on exciting projects at all our airport investments – Sydney, Copenhagen, Brussels and Bristol.” She added: “MAp is well placed to continue to participate in the privatisation of airports globally, and we see substantial future opportunity in this area. We believe our track record as a successful and responsible investor and operator makes us the bidder of choice for many potential airport vendors.”

GERMANY/SCANDINAVIA. A consortium under the leadership of Allianz Capital Partners (ACP), private equity firm 3i and shipping company Deutsche Seereederei (DSR) Rostock has signed an agreement to purchase the shares of ferry operator Scandlines Group. ACP and 3i will hold 40% each of the shares and DSR will hold 20% of the shares. The company previously belonged to Deutsche Bahn and the Danish Ministry of Transport and Energy. The mutual agreement is subject to approval by the board of Deutsche Bahn AG, the Finance Committee of the Danish parliament and anti-trust authorities. The consortium said it plans to further strengthen and develop Scandlines Group as a ferry shipping company in the Baltic Sea region. “For that purpose,” it said, “the consortium has agreed on a long-term business plan which relies on the qualified and well-skilled employees of Scandlines Group. The consortium has therefore agreed not to lay-off any employees for operational reasons until 31 December 2010.” The new owners intend to seek a listing of Scandlines Group on the stock exchange. At the time of any IPO DSR has the opportunity to take over the industrial leadership of the company. The consortium will appoint Jan Stenberg, the former chief executive of SAS and a former supervisory board member of Lufthansa, to become Chairman of the supervisory board of Scandlines Group. Moodie Interactive: Click on the image above

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Thursday 21 June 2007

Scandlines operates 24 ferries on 12 routes and carried 20 million passengers last year. The company had revenues of €546.9 million in 2006, up from €522.7 million in 2005. Net profit also rose sharply, up +47% to €103.1 million. Retail, catering and other services accounted for €229 million of group revenues in 2006, with perfumery sales at its ferry and border shops taking an increasing share of revenues.

GERMANY. Smokers International Airways (SMINTair), the world’s first airline for smokers, will make its inaugural flight from Düsseldorf to Nagoya this October. The Boeing 747 aircraft will carry 138 business and first class passengers – no economy seats – plus a bar and two lounges. It will have two duty free shops and will serve caviar, oysters and other luxury cuisine. The airline’s Founder and Managing Director Alexander Schoppmann told The Moodie Report: “There will be a duty free shop situated in the first class upper deck lounge. It will sell items beyond the €5,000 level and up to €50,000.” The range will include luxury jewellery, watches and accessories. Another duty free shop in the back of the plane, where there is a seated lounge with sofas, will offer a range of items below €5,000. SMINTair will run the duty free operation in-house. The company is also seeking sponsors for its various onboard lounges and bars as well as airport courtesy and Departures lounges. The Courtesy Lounge serves as a sponsor’s sales point, with catering by SMINTair. The airline said such sponsorship would be ideal for producers of spirits, tobacco, Champagne, wines, caviar, oysters and coffee, with the lounge serving as the sponsor’s duty free sales point. Luxury goods producers are being targeted for the Departures lounge. Sponsors will be exempt from duty free listing fees and will retain all revenue from sales. For full details and a fascinatingly compelling interview with Alexander Schoppmann, see www.TheMoodieReport.com

NEW ZEALAND. Auckland International Airport Limited (AIAL) has announced that the Canada Pension Plan Investment Board (CPPIB) has approached certain shareholders to purchase their AIAL shares for NZ$3.10 each “in advance of a possible intention to launch a takeover”. AIAL’s shares rose +13.5% to NZ$3.20 after the revelation this week. Local analysts and media predicted that NZ$3.50–3.70 a share will be necessary to pull off such a move. In a statement AIAL said that it understood that the approaches have been rejected by the shareholders concerned. “The Directors also understand that CPPIB does not intend to proceed with a takeover offer at this time,” it added, pointing out that it has not received notice of any takeover offer. However the company said that its directors are in discussions with parties, including CPPIB, “regarding value enhancing opportunities including acquiring an ownership interest in AIAL and supporting the strategic development of AIAL. These opportunities are being evaluated by AIAL’s Board and remain subject to a number of conditions.” It concluded: “The Board recommends to shareholders that they don’t sell their shares in AIAL as doing so would risk forgoing the value upside associated with the above mentioned opportunities or a contested offer, should one eventuate.” Auckland is the second-busiest international airport in Australasia – ranked behind only Sydney and ahead of Brisbane, Melbourne and Perth in passenger numbers. It is also one of the most pro-active in commercial revenue terms. It called recently for tenders from its two existing duty free retailers, The Nuance Group (trading as Regency Duty Free) and DFS Group, for a single on-airport duty free business until June 2015.

US.

Fairn & Swanson’s retail division Baja Duty Free will open a new store on the Mexican border this autumn. The shop, located in Laredo, Texas, will be the company’s seventh store on the California and Texas land borders with Mexico. “This new addition to the Baja family is a strategic location,” said Vice President of Retail Operations Elisa Castro. “We see considerable growth potential for us in this market. This store is part of the continuing plan of Fairn & Swanson to expand along the Texas border.” In related news, Baja Duty Free last month received the Gold Standard Christmas Award from wines & spirits company Diageo for the second year running. The award is given to distributors for the best in-store visual presentation. Baja competed against other stores from the CAFEC (Central America, Free Trade Zones, Ecuador, Caribbean) region. Moodie Interactive: Click on the image above

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Thursday 21 June 2007

TENDER & CONTRACT NEWS

SINGAPORE.

Sunglass Hut (Southeast Asia) has been awarded the concession for an optical shop at Singapore Changi Airport’s new Terminal Three after it was the sole bidder for the business. The shop is located in T3 Basement North. It brings to two the number of outlets Sunglass Hut will operate at the new T3, which opens on 9 January 2008. Earlier this year the company was awarded another optical shop concession in Departure/Transit Lounge South. In its tender the retailer offered either 10% of monthly gross sales or a minimum guarantee of S$5,041.67, whichever is higher. Also in T3, Sony Electronics (Singapore) has been awarded a key brand-name electronics concession, in Departure/Transit Lounge North. Sony beat off competition from rival Market One for the business. It offered 9% of total monthly gross sales or a minimum monthly guarantee of S$33,000, whichever is higher. The contract is for three years with no option for renewal. Meanwhile the Civil Aviation Authority of Singapore has tendered two new concessions. One is for a sports store in Terminal One, where bids close on 12 July. The other is for a brand name Western bar and grill at Departure/Transit Lounge North in T2. Bids close on 9 July for the contract, which runs from 8 October 2007 to 7 October 2009 with no option for renewal.

SOUTH KOREA. Eight travel retailers submitted bids for the big Incheon International Airport duty free tender which closed last week. The five local companies were Lotte Duty Free, AK Duty Free (both of which are among the four Incheon incumbents), Shilla, Paradise Duty Free and Walker Hill. Three international companies joined them: incumbent DFS Group, King Power Hong Kong (through its newly created Korean subsidiary) and Aldeasa. Incheon International Airport Corporation (IIAC) will be delighted with the high-quality field. Besides the incumbents, Paradise Duty Free runs one of Asia’s best and most luxurious downtown stores (in Busan); Shilla is Seoul’s number-two downtown retailer (and bid highest in the last Incheon tender, only to subsequently drop out); and Walker Hill has long run another successful hotel-related downtown duty free operation in Seoul. King Power (HK) made the seriousness of its aspirations clear in February when it announced the creation of a wholly owned local subsidiary, King Power Group Korea. And Aldeasa’s global credentials are well known through its powerful Spanish operations, as well as new international business in India (Mumbai), Atlanta, Vancouver, Saudi Arabia and Kuwait. The tender is the biggest in the industry as the only airport location generating greater duty free sales is London Heathrow Airport, which is self run by BAA subsidiary World Duty Free. The incumbent retailers at Incheon are Lotte Duty Free, DFS, AK Duty Free and Duty Free Korea. Under the terms of the tender structure five licences in two groups (A and B) are being offered. In group A there are three and in group B there are two. Bidders could target all five licences, but they can win only one licence in each group. The winners in group A can win one other in group B. This means IIAC will end up with three to five retailers. There will be two fragrances & cosmetics retailers and one for liquor & tobacco. Each contract runs from 1 March 2008 until 28 February 2013. Duty free sales at Incheon International Airport reached a record KRW850 billion (US$916 million at today’s exchange rates) in 2006. That represented an increase of +12% over 2005 in local currency. The following duty free contracts are on offer: Fragrances & cosmetics: Two concessions covering a) the existing Passenger Terminal West as well as the new Concourse due to open in August 2008 and b) Passenger Terminal East. The two contracts will span 2,297sq m (seven outlets) and 1,076sq m (three outlets) respectively. Incumbents: Lotte and DFS Group. Liquor & tobacco: One concession covering 1,923.8sq m of space (12 outlets) in the Main Terminal Building and Concourse A. Incumbents: AK Duty Free and Duty Free Korea. Moodie Interactive: Click on the image above

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Thursday 21 June 2007

Fashion and all other items (except those covered in other concessions): Two tendered concessions – one covering 2,281.4sq m in Passenger Terminal East (12 outlets) and space of 4,638sq m (20 outlets) across the Main Terminal Building and Concourse A. Incumbents: Lotte, DFS Group, AK Duty Free and Duty Free Korea. Government-run tourism body and retailer Korea Tourism Organization (KTO), which currently runs a number of stores at the airport under the Duty Free Korea banner, has been awarded one of the ‘B’ licences already – a package of 12 outlets spanning 2,600sq m in the west section of the existing Main Terminal Building. These stores comprise fashion, boutiques, food, watches, gifts and other items (but not liquor, tobacco, cosmetics and fragrances). The B group concession is divided into three sections; East, Center plus the new concourse, and West. Duty free revenues are vital to maintaining KTO’s work in developing South Korea’s tourism infrastructure and marketing. It has long argued therefore that it should be guaranteed a retailing place at the country’s national gateway. For many years it was the sole retail operator at Kimpo (now Gimpo) Airport in Seoul, before the opening of Incheon International Airport in March 2001. From that point it had to share the spoils with three other players. Meanwhile, Incheon’s food & beverage tenders drew 14 competitors across seven packages. As expected there is a strong local presence with 12 bidders: CJ Food System, SRS Korea, SPC, Amoje-Pulmuone, Hanwha Resort, Hotel Lotte, Chosun Hotel, Walker Hill Hotel, CJ Foodvill, Starbucks Coffee Korea and Paris Croissant. They are joined by two major international players: HMSHost and SSP-Our Home. The contract duration is from 1 September 2007 until 31 August 2011. Included are 2,835sq m across 17 outlets in the Airside West area, 17 outlets over 2,803.8sq m in the Airside East area and 1,855sq m of space landside (21 outlets on the first and third floors). Categories offered include fast food, coffee, snacks, bakeries, a Korean food court and bars. The incumbents are CJ Food, SRS Korea, Chosun Hotel and Walker Hill Hotel.

US.

Low-cost airline JetBlue Airways Corporation has issued a Request for Proposals (RFP) for retail and food service concessions at New York JFK International Airport Terminal Five. JetBlue is constructing a new 635,000sq ft passenger terminal behind the historic Eero Saarinen terminal at JFK; when completed in 2008 the new T5 will serve as JetBlue’s flagship terminal. JetBlue said: “We are seeking business partners who share our passion for the highest levels of customer service and our overall vision of ‘bringing humanity back to air travel’ and those who wish to join us as we write a new chapter in the history of JetBlue. JetBlue Airways Corporation invites proposals from qualified persons and business entities that have demonstrated expertise in the development and operation of food service and/or retail operations at airports or other types of transportation centres, shopping centres, malls or downtown areas to operate and manage the food service and retail concessions in Terminal Five at John F. Kennedy International Airport.” Around 200 master developers, branded franchises, concessionaires and other food service and retail operators attended a meeting on 5 June to discuss the RFP. Documents are available from Raymond Smyth, JetBlue Airways, 118–29 Queens Boulevard, Forest Hill, NY 11375; e-mail [email protected]. Telephone: +1 718 709 3114; fax: +1 718 709 3602. Note: This story was first broken by Airport Revenue News, the leading industry media covering airport commercial revenues in the US. The Moodie Report and Airport Revenue News struck an editorial alliance last October to bring together the main international and US industry titles. This includes an open exchange of feature and news material to assist each other’s coverage of all airport commercial revenues. To subscribe please visit www.airportrevenuenews.com

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FOOD & BEVERAGE AND OTHER COMMERCIAL REVENUES

SCANDINAVIA. Autogrill Group subsidiary HMSHost Corp has strengthened its presence in Copenhagen and Stockholm airports by winning a contract for four outlets in the Danish hub and a new one in the Swedish airport. The two operations together are expected to produce accumulated sales of around €50 million. The four new outlets at Copenhagen International Airport – Starbucks, Heineken, Segafredo and Nørrebro Bryghus – are in addition to the three that the group has been operating since 2006. The new contract, which also involves rebuilding the locations, is expected to generate accumulated sales in excess of €36 million over the seven-year concession. With around 21 million passengers moved in 2006 (up +4.5% on 2005), Copenhagen International Airport has grown appreciably in recent years due to strong growth by low-cost operators, in addition to it being the main hub for SAS Scandinavian Airlines, the flag carrier for Sweden, Denmark and Norway.

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The Moodie Report

Thursday 21 June 2007

A new contract brings to nine the number of group stores at Stockholm Arlanda International Airport, where it has operated since 2005 in terminals T2, T4, T5 and the SkyCity area. The new outlet – MAX, the country’s best-known traditional hamburger brand – is in Terminal Four and will open at the end of 2007. It is expected to produce accumulated sales in excess of €13m over the ten-year contract. Stockholm Airport handles over 17 million passengers every year, with more than 70 airlines travelling to 170 destinations. These new contracts come just weeks after HMSHost secured a contract in Shannon Airport, and further consolidate the group’s presence in Northern Europe. There are now food & beverage and retail locations managed by Autogrill in 51 European airports.

US.

Hudson Booksellers is this week celebrating ‘Juneteenth’, short for June 19th, commemorating the day that the last slaves in Texas were informed that slavery had ended in the US. The event, also known as Emancipation Day and Freedom Day, has been quietly observed since 1865 with picnics, barbecues and prayer services. As part of its Hue-Man programme promoting diversity in literature, Hudson this week remembers Juneteenth with displays in all 70 of its US airport bookstores. Travellers can stop in and find the work of great African-American authors past and present – from Maya Angelou, Nikki Giovanni and Toni Morrison to Barack Obama (Democrat Presidential candidate), Ralph Ellison and Richard Wright. Hudson Vice President Book Buying and Promotions Sara Hinckley said: “Juneteenth at Hudson Booksellers is a great opportunity both to revisit classics of literature and to discover new voices…to recall familiar views while entertaining new visions, hopes and dreams for the future.”

US.

Powrnaps Retail Concepts is to introduce ‘sleep pods’ for travellers at San Francisco International Airport. “Soon travellers will be enjoying a new type of retreat,” the company said, “napping and recharging in the privacy of singleoccupancy sleep pods.” A 20-minute sleep session at the Powrnaps Sleep Station will cost US$20–$25 and is expected to be available in the autumn. Powrnaps said its stations will be furnished with “state-of-the-art sleep technology, including the Zero-G Napchair, Powrnaps proprietary sleep system and Bose headphones”. The Zero-G Napchair reclines to an optimal sleeping position (a NASA design) that maximises circulation and minimises spinal pressure, said Powrnaps. It added: “Customers will fall asleep fast as they listen with Bose headphones to soothing recorded sounds that guide people through a complete cycle of deep relaxation, sleep, and a heightened state of wakefulness at the end of 20 minutes. The result of one session at the Sleep Station offers the same benefits as that of a three-hour nap. The sleep session benefits are many: it lowers heart rate and blood pressure, reduces anxiety and stress, and improves energy and alertness.”

THE MOODIE REPORT

AVIATION SECURITY UPDATE

CAYMAN ISLANDS. Tortuga Rum Company Ltd, the largest duty free liquor retailer in the Cayman Islands, has introduced a Liquor Travel Safety Pack, specially designed to protect litre bottles in checked luggage. The bubblewrap liquid-proof bag has easy press and seal closure and ensures that purchases are protected with no leakage should a bottle get broken, the company said. “We want our customers to be confident that their liquor purchases will get home safely in their checked luggage,” said Robert Hamaty, Founder and President of the Tortuga Rum Co, who designed the Liquor Travel Safety Pack with an agent in China. “The bag is reusable so they can use it when they get home for carrying wine or spirits for boating, camping and picnics.” He added: “Additional advantages of the safety bags are that three wrapped bottles still fit into already designed duty

The Moodie Report© is published by Moodie International. All rights reserved. Please send any comments or stories to [email protected]

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The Moodie Report

Thursday 21 June 2007

free corrugated cardboard carry-home boxes. Or for those who have onward connections, the carry-home box can be eliminated, saving the retailer that expense and the pack put into a plastic shopping bag instead.” Since the aviation security crisis began last year Tortuga Rum has experienced a -17% to -20% decline in its liquor sales for cruise and airport duty free. Following the new regulations requiring all travellers with connecting flights from a ship’s home port or an airline connection to place duty free liquor in their checked luggage, Tortuga’s sales staff immediately offered to bubble-wrap bottles. But they found the number one concern among travellers was a fear that breakages might ruin clothes in their suitcases. Hamaty said the new Liquor Travel Safety Pack will alleviate this issue and can help other duty free retailers. “The bag could be used for duty free perfume and cosmetics, as well as all litre bottles or smaller,” said Hamaty, who said interested companies could e-mail him at [email protected]. “We have a bag for 1.75 litre bottles being designed and the factory has the capacity to quickly fulfil container-load orders. We hope this initiative will help the duty free industry recapture more sales,” he added.

THE MOODIE REPORT

PEOPLE NEWS, JOBS, EVENTS & NOTICES

ASIA PACIFIC. The new Board of the Asia Pacific Travel Retail Association (APTRA) had its first meeting on 14 June and welcomed two new members, Andrew McLeod from British American Tobacco and David Segreto from Diageo. APTRA President Sunil Tuli commented: “The addition of Andrew and David to the Board adds significant experience and weight to APTRA and it highlights the importance of the many challenges the industry faces. It also signifies the growing recognition that all industry stakeholders need to ‘step up to the plate’ and play a role, in order to ensure a sustainable and profitable future.” Earlier in the year APTRA appointed experienced retailer Alan Edwards on a short-term consultancy to communicate and liaise with industry stakeholders over the aviation security crisis and the LAGs issue. That term is now coming to an end and the Board expressed its appreciation to Edwards, who it said “has been instrumental in representing the industry and co-ordinating a more reasonable outcome for all industry beneficiaries”. Commenting on the aviation security crisis APTRA noted: “A great deal of work is still required in terms of consumer understanding and regional harmonisation, but the Board is optimistic that improved momentum will continue.” APTRA is finalising plans for this year’s Indian duty free conference – dubbed ‘Incredible India’ – to be held on 18–20 September. The event will be held in New Delhi at the Radisson Hotel, beginning with an opening reception on 18 September. For details contact [email protected] The new APTRA board consists of: Sunil Tuli, King Power Hong Kong (President) John Kammerman, Imperial Tobacco (Secretary) Rakhita Jayawardena, Centaur Travel Retail (LAGs) Paul Topping, Alpha Asia (Membership) Andrew McLeod, BAT (Marketing) Richard Ferne, Camus (Treasurer)

Joël Lafon, Maxxium (Policy & Strategy) Heather Cho, Korean Air Rémi Chadapaux, Scental David Segreto, Diageo Tom Thomas, Australian Duty Free Association Erik Juul-Mortensen, Tax Free World Association

FRANCE. Marc Mansour, formerly Senior Sales Manager Travel Retail Division at L’Occitane, has been appointed Regional Director Middle East & Africa. In his new role, Mansour will be responsible for the local market, in partnership with L’Occitane’s distributors, but also for the travel retail channel in the region.

The Moodie Report© is published by Moodie International. All rights reserved. Please send any comments or stories to [email protected]

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The Moodie Report

Thursday 21 June 2007

HONG KONG.

‘Turning Tears into Smiles’, the industry fund-raising dinner being held on 5 October in Hong Kong on behalf of children’s cleft lip and palate charity The Smile Train, has received a further boost this week, with inflight services specialist ISG Hong Kong lending its support to the cause. The dinner is being co-hosted by Hugo Boss and The Moodie Report in Hong Kong to raise funds for The Smile Train, which last year offered free cleft surgery to over 42,000 children in over 60 countries, particularly developing markets. It costs just US$250 and takes only 45 minutes to change a child’s life forever with a simple surgery. ISG Managing Director Tony Detter said: “It was really inspiring to read the article in The Moodie Report regarding the industry’s commitment to The Smile Train programme. I know there was quite a buzz about this worthy cause during the Singapore show last month, and within such a wonderful industry as travel retail, it is no surprise that you are finding such a high level of support. ISG would definitely like to be a partner in this effort as well. “Please count on us to reserve a table at the dinner in October. ISG will make a separate US$1,000 donation to the programme, and I will match this with another US$1,000 personally.” ISG joins other leading Hong Kong travel retailers – DFS Group, Nuance-Watson (HK), Sky Connection, King Power (HK) and Airport Authority Hong Kong – in supporting the cause, bolstered by many other retailers, suppliers, airlines and trade associations. Nuance-Watson (Hong Kong) is putting donation boxes for The Smile Train in its 10 key points of sale at Hong Kong International Airport in the run-up to the event. And its staff pledged a collective donation of US$2,000. VIP guests include Ugandan philanthropist Michael Ezra Mulyoowa – Uganda’s ‘Man of the Year’ in 2006 – who made industry waves with the biggest single purchase in the 60-year history of the duty free business. He offered an amazing US$250,000 for a one-of-a-kind Montblanc watch, auctioned for charity onboard Dubai-based airline Emirates in association with the German luxury house. The fund-raising day will also feature a nine-hole industry golf tournament, kindly hosted by King Power Group Hong Kong, whose subsidiary Airport Management Services has been awarded the contract to run the SkyCity Nine Eagles Golf Course at Hong Kong International Airport. Over 140 places have already been booked for the dinner, with three and a half months to go. A venue capable of holding such an audience is currently being finalised and an announcement will be made early next month. Besides seat and table bookings, pledged cash donations have already climbed above US$60,000. Further fund-raising activities will be held on the evening. You too can help the cause by booking seats or full tables at the event (HK$2,000 a seat or HK$20,000 a table) or by pledging your donations by e-mail to The Moodie Report editor and publisher Martin Moodie at [email protected] or Nadine Heubel at [email protected]. Pledges can be made at all levels to suit company and individual budgets – remember that for just US$250 you can change one child’s life. We need the industry’s support – kindly put the date in your diary now and do whatever you can. The train is gaining momentum. Please join us onboard.

ITALY. Bertrand Pariot, formerly France & Benelux Managing Director at Bvlgari, has been appointed to the role of Travel Retail Worldwide, Central & South America Managing Director for the Parfums division. He replaces Christian Konrad, who has been appointed Managing Director Germany and Northern Europe for the Jewels, Watches & Accessories division of Bvlgari.

UK.

Sue Walker, former Head of Inflight Retail at Britannia Airways (Thomsonfly), has joined Alpha Airports Group on a consultancy basis, effective 1 June. Thank you for reading and supporting The Moodie Report.

Martin Moodie, Editor and Publisher Moodie Interactive: Click on the image above

The Moodie Report© is published by Moodie International. All rights reserved. Please send any comments or stories to [email protected]

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