Major airport duty-free retail chains including UK-based Alpha Retail, Weitnauer Group, Switzerland and Flemingo International, Dubai are likely to bid for shopping space to be leased at 10 airports by the Airport Authority of India.
AAI floated a global tender in September inviting bids for duty free shopping space of around 1,566.92 square metres in 10 major airports.
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The last time AAI had floated tenders for duty free shops was in 2000, which was bagged by India Tourism Development Corporation with a bid of Rs 37 crore (Rs 370 million).
AAI officials said though the bid size was ambitious, ITDC could not generate adequate returns. AAI was not allowed to invite any further bids from 2001 onwards due to the government's decision to privatise airports.
This time round AAI is planning to debar ITDC from bidding as its outstandings over the past three years have mounted to Rs 20 crore (Rs 200 million).
Weitnauer is a $9 billion Swiss retail conglomerate which has 50 operating companies across the globe. The company had evinced interest in the Indian duty free sector in the past too.
Alpha Retail is a UK-based chain with a strong presence in the UK, US and Europe. The company is at present operating at Kochi International Airport. Flemingo International, Dubai operates duty free shops in the middle east and Asia regions.
The company had tried to enter into a joint venture with Fleming DFS India to bid for duty free space in certain non-metro airports in 2000 but was disqualified by the Foreign Investment Promotion Board due to the existing foreign direct investment norms in the retail sector.
Duty free spends in India are as low as $1.5 per passenger primarily owing to the lack of shopping opportunities.
Non-traffic revenue for AAI accounts for only 30 per cent of its entire revenue as opposed to the international experience, like that of Changi Airport, Singapore, where non-traffic revenue accounts for nearly 70 per cent of total revenue.
Revised estimates for 2002-03 for AAI reveal that the share of non-traffic revenue has fallen to 30.52 per cent from 31.75 per cent in 2001-02.
Non traffic revenue has grown by a minuscule 2 per cent in 2002-03 to Rs 727.77 crore (Rs 7.277 billion) from Rs 713.57 crore (Rs 7.135 billion) in 2001-02.
AAI officials hope that with foreign players entering the duty-free sector the trend will be reversed.
