THURSDAY 15 JUNE 2006 WELCOME FAST, FACTUAL, FREE

WELCOME to The Moodie Report.

In an industry saturated with media we’re surprised at the lack of fanfare regarding TheNuance Group’s new Indian joint venture with local retailer Shopper’s Stop. We thinkit’s one of the year’s big stories; a canny move by the Swiss retailer, one of many industryplayers striving for ascendancy in a fast-changing, perennially frustrating market withhuge potential but equally commensurate risks.

Foreign sojourns, when taken alone, have an unhappy knack of failing in the retailsector, which is notoriously dependent on local knowledge. Nuance is banking much onIndia but it knows it will be difficult to land any of the big prizes alone. Shopper’s Stopappears a good partner (we particularly like the name of its headquarters, Eureka Towers,

which might also sum up the reaction ofNuance management when the partnershipwas conceived).

Here’s Shopper’s Stop’s vision statement:“To be a global retailer in India andmaintain number one position in the

Indian market in the department store category.” Nuance’s equivalent could be: “To be aglobal retailer in India and maintain number one position in the world airport retailmarket.” It’s a promising marriage – and its announcement explains why Nuance soconfidently advertised for a CEO in India through The Moodie Report last month.

Our other major story comes from Russia, where local knowledge has proven crucialtime and again in overcoming challenges. Last summer the Russian authorities intro-duced stringent domestic market labelling requirements for all imported productscontaining alcohol, including fragrances. Duty free gained a reprieve, but now it toomust adopt the measures. Not for the first time the country’s travel retailers must reactto irksome, difficult and often last-minute legislative hurdles.

To do that successfully, international companies need strong connections. During afleeting visit to St Petersburg last week I was honoured to attend the 51st birthdaycelebrations of Lenrianta Director General Anatoly Shashin. A remarkable man and agreat character, he is the Russian counterpart (representing co-shareholder PulkovoAviation) to Aer Rianta International General Manager Liam Flood. Without Shashinand his organisation ARI would not be the force it is in the city, let alone as able as it isto cope with legislative threat. As Liam Flood and ARI Retail Operations Director BillMaxwell toasted him warmly, the power of partnership was there for all to see.

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THURSDAY 15 JUNE 2006

FAST, FACTUAL, FREE

COLM MCLOUGHLIN: THE DUBAIDUTY FREE MAN-AGING DIRECTORTHIS WEEKANNOUNCED ANEW DAILYSALES RECORD OFUS$4.9 MILLION,POSTED ON THERETAILER’S 22NDANNIVERSARY. WHAT APERFORMANCE – SOME +57%AHEAD OF THE PREVIOUS 24-HOUR RECORD.

Liam Flood: ARI’s General Man-ager in St Petersburg last weekopened the latest addition toLenrianta’s excel-lent retail offer atPulkovo Airport.Constant promo-tions and storerenewal, allied tosome first-rateshop floor staff anddetailed analysis of sales by space,is driving impressive spends. IfRussia ever lifts its visa require-ment for most European travellerswatch this airport take off.

Nigel Keal: The gardening leaveis over for the long-time WorldDuty Free Head of Category forperfumes and cos-metics as he finallytakes up his newpost as Procure-ment Director atDufry. With thissigning, his nativeSpain thrashingUkraine 4–0 in the World Cupand his adopted Switzerland sur-prising the French with a 0–0draw, it’s been a great week forDufry CEO Julián Diaz.

“Our aim is ultimately to growinto the leadingdestination retailerin the Caribbean.”Eric de Jager,Managing Directorof Tourvest’s RetailMerchandising Divi-sion, celebrates the60% acquisition of Barbadiansouvenir retailer Ganzee. The dealadds lustre to Tourvest’s impres-sive destination focus.

PERSONALITIES OF THE WEEK

THE MOODIE REPORT DATA ROOM – TRAVEL & TOURISM NEWS

INSIDE THE MOODIE REPORTRussian labelling dilemma ... 5Tourvest expands in UK and Caribbean ... 6BAA/WDF spread their web ... 7Desert Island Duty Free: Peter Sant ... 12

QUOTE OF THE WEEK

INTERNATIONAL. Tourism traffic between countries has increased by between+12% and +35% following deregulation of their air service agreements, according to anew study on the Economic Impact of Air Service Liberalization. The report wasconducted by research group InterVISTAS and was jointly sponsored by the Pacific AsiaTravel Association, other global travel organisations and Boeing. The report predictsthat liberalising a further 320 air routes currently not operating in an ‘Open Skies’environment would generate traffic growth of almost +63%, compared to typical worldtraffic growth of +6–8%. In addition it would create US$490 billion in gross domesticproduct which, said the report, “corresponds to an economy almost the size of Brazil”.

US. Orlando and the state of Floridaare expected to welcome more Japanesevisitors in coming months.

Orlando is one of the dozen cities beingpromoted by the US Department ofCommerce’s tourism promotion cam-paign in Japan that will begin nextmonth, Travel Journal International(TJI) Online reported this week.

Last year Orlando was one of the fewmajor cities in the US that saw fewerJapanese visitors, down -14.6% to35,000. The region’s hurricanes were amajor deterrent. Florida handled some66,000 Japanese visitors, off -18.5%.

“We have fallen down on Japan market-ing,” said Bill Peeper, Director of theOrlando Convention and VisitorsBureau. However, marketing effortswith the federal government are expect-ed to help turn things around.

He said that aside from the popularityof Universal Studios Orlando, DisneyWorld and other theme parks andattractions in the city, downtownOrlando is gaining as a new destination.

Thursday 15 June 2006The Moodie Report

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THE MOODIE REPORT DATA ROOM – TRAFFIC NEWS

Selected traffic numbers reported in the past week

Country Airline/Airport Apr ’06 vs Apr ’05 (%)

Country Airline/Airport May ’06 vs May ’05 (%)

Germany Hamburg Airport +29.7 (international)Ireland Dublin Airport +23.9 (total pax)Japan JAL Group -6..2 (international)Japan Osaka Kansai International Airport +1.0 (international)Spain AENA (all airports) +19.7 (international)Spain Madrid Barajas Airport +25.0 (international)Thailand Bangkok Don Muang Int. Airport +12.0 (international)US AirTran Airways +33.2 (total pax)US Charlotte/Douglas Int. Airport +15.9 (international)US Orlando International Airport +2.1 (international)US Pittsburgh International Airport -29.2 (international)US Portland International Airport +9.6 (international)US Seattle-Tacoma -0.2 (international)

Canada Ottawa International Airport -3.5 (international)China China Southern Airlines +7.2 (total pax)Croatia Dubrovnik Airport -0.3 (total pax)Denmark Copenhagen Kastrup Airport +6.1 (international)Finland Finnair Group (three airlines) +6.5 (total pax)Finland Helsinki Vantaa Airport +11.5 (international)France Nice Côte d’Azur Airport +4.1 (international)Iceland Keflavik Leifur Eiríksson Int. Airport +14.9 (total pax)New Zealand Christchurch International Airport +2.0 (international)

Note: ‘total pax’ may include domestic trafficSource: ©The Moodie Report

DENMARK. Passenger numbers at Copenhagen Airport rose by119,780 or +7% in May over the same month last year. Scheduledinternational passengers increased by +7.4% or 108,329, while interna-tional charter numbers decreased by 12,771 (-11.5%). Consequently,the total number of international passengers increased by 95,430(+6.1%). Locally departing passengers increased by 61,316 (+10.7%)while transfer/transit passengers decreased by 3,241 (-1.1%).

EUROPE. Overall passenger traffic at European airports increasedby +10.3% year-on-year in April, according to ACI Europe figuresreleased this week. The comparative numbers were boosted by Easterfalling in April this year; in 2005 the holiday fell in March. Passengerfigures for April once again indicate that Group 4 airports (airportshandling less than 5 million passengers per year) posted the largestincrease in traffic with an average rise of +15.1% year-on-year, and anaverage increase of +27.8% when compared with April 2004.

Airports welcoming more than 25 million passengers per year (Group1), airports with between 10 and 25 million passengers (Group 2) andairports handling between 5 and 10 million passengers (Group 3)reported average increases of +8.1%, +11.8% and +8.7% respectivelywhen compared with April 2005. The same comparison of April 2006with April 2004 demonstrates average increases of +12.1%, +16.5% and+14.3% respectively.

Examples of airports that experiencedthe highest increase in passenger trafficper group, when comparing March2006 with March 2005, include:– Group 1 airports: Barcelona (+17.5%),

Madrid (+14.7%) and LondonGatwick (12.4%)

– Group 2 airports: Lisbon (+24.9%),Dublin (+23.9%) and Milan Malpensa(+18.3%)

– Group 3 airports: Lanzarote(+18.9%), Gran Canaria (+17.9%) andWarsaw (+15.5%)

– Group 4 airports: Moscow Vnukovo(+48.9%), Rome Ciampino (+47.4%)and Liege (+46.2%).

GERMANY. Frankfurt Airport this week reported its busiest May onrecord. The total number of passengersusing the country’s hub airportincreased by +2.6% year-on-year to4,639,416.

Western Europe and Northern Europepassenger traffic grew noticeably by+6.5% and +12.1% respectively year-on-year. The Asian market increasedby +7.5%, with sharp and encouraging

growth recorded; destinations in Japan (up +11.2%) and China (up +16.7%) rose particularly fast.

6,477,826 passengers used parent company Fraport Group’s airports in May, up +2.9% year-on-year. Some 325,163 pas-sengers used Frankfurt-Hahn Airport, a +16.6% jump. Hannover Airport registered a -1.1% dip to 501,831 passengersand Saarbrücken Airport a -12.6% drop to 42,391 passengers.

At Turkey’s Antalya Airport redistribution of passenger flows acrossthe two terminals, effective since late April, showed up in traffic resultsfor the first time in May. “Capacity utilisation of Fraport’s Antalyaterminal improved noticeably in May and will continue stronglyduring the coming months,” Fraport said – good news for its duty freeretailer The Nuance Group. The terminal served 501,248 passengers,up +3.2%. Passenger traffic at Peru’s Lima Airport rose by +3.8% to468,611 passengers in May.

JAPAN. The number of Japanese travellers going abroad in Aprilfell by 2.4% year-on-year to 1,298,000, the lowest monthly tally in2006. But the dip may be attributable to a change in holiday phasing,said Travel Journal International (TJI) Online, the country’s leadingtravel publication, which described the outbound market as “a roller-coaster ride for overseas travel”.

Late April marked the start of Golden Week travel in Japan, one ofthe most important travel periods. One reason for the April fall, TJIsaid, was the shift in travel during Golden Week from April to May totake advantage of the better combination of holidays and weekends.

For the first four months of 2006 the number of Japanese going abroadhas fallen to 5,608,215, down -1.5% compared to a year ago. Thegovernment predicts that outbound travel in 2006 will top 18 million.



Selected traffic numbers reported in the past week (continued)

Country Airline/Airport May ’06 vs May ’05 (%)

Note: ‘total pax’ may include domestic trafficSource: ©The Moodie Report

Norway Oslo Gardermoen Airport +16.6 (international)Portugal Lisbon Airport +9.2 (total pax)Slovakia SkyEurope +44.2 (total pax)South Korea Seoul Incheon Airport +8.0 (international)Spain Iberia +7.8 (international)Spain Spanair +25.4 (total pax)Sweden LFV (19 airports) +12.3 (international)Sweden SAS Scandinavian Airlines +3.3 (total pax)Switzerland Geneva Airport +6.9 (total pax)Switzerland Swiss International Air Lines +9.7 (total pax)Switzerland Zürich Airport +8.6 (total pax)UK BAA (seven airports) +3.6 (total pax)UK Aberdeen Airport +13.1 (total pax)UK easyJet +15.2 (total pax)UK Edinburgh Airport +1.5 (total pax)UK Glasgow Airport -1.9 (total pax)UK London Gatwick Airport +4.3 (total pax)UK London Heathrow Airport +1.4 (total pax)UK London Stansted Airport +11.3 (total pax)UK Southampton Airport +2.9 (total pax)US jetBlue Airways +17.8 (total pax)US United Airlines +5.7 (total pax)



THE MOODIE REPORT RETAIL NEWS

FRANCE. Aelia has unveiled plans for its recently-won six-year retail contract at the new low-cost terminal, knownas MP2, at Marseille Provence Airport. Aelia Director of Regional Airports Pascal Le Droff told The Moodie Report:“The business will probably start in September. The shop is to be 286sq m and will include the traditional alcohol,tobacco, wine and Champagne, perfumes and cosmetics activities.”

And there will be other new concepts. These include sunglasses and luggage offers, plus single-price proposition BijouxTerner and L’Occitane. Le Droff said: “The low-cost passengers at Marseille will therefore be able to find a wide rangeof products adapted to their specific profile.” The new contract adds strength to Aelia’s presence in Marseille. It alreadyhas two shops in Terminal One, one of 570sq m in Hall 1 and the other of 78sq m in Hall 3. Aelia replaced Dufry asthe main travel retailer at Marseille in February, after winning a tender for the business last December.

INDIA. The Nuance Group is teaming up with one of India’s leading retailers – Shopper’s Stop Ltd, part of the K Raheja Corp (Chandru L Raheja Group) – in a joint venture designed to enter the Indian airport retail market. Thepartnership will be equally owned by both partners and plans to offer a comprehensive range of services, from operat-ing master concessions to distribution of international brands. The Memorandum of Understanding was signed by thecompanies’ representatives in Hyderabad last week.

Shopper’s Stop has built up a strong competence in department stores and operates 20 Shopper’s Stop stores all overIndia, which carry a mix of both national and international brands. The company has been instrumental in bringing toIndia some of the best names in fashion and cosmetics. It has a national presence and is the country’s largest depart-ment store chain.

Nuance said: “India is one of the most promising markets as far as airport development and marketing is concerned.This process is further accelerated by the upcoming privatisation of several major airports across the country as well asby the fast expansion of various airline companies in the country. The Nuance Group has defined India as one of its keystrategic expansion areas.

“Teaming up in a 50:50 joint venture, the two companies offer a perfect combination in expertise of internationalairport retailing and retailing to the Indian customer. The objective of the joint venture is to offer a wide range ofservices for Indian airport retail both on the duty free side and the domestic side as per applicable regulations, from theoperation of master concessions, duty free and food & beverage concessions to the franchise of concepts developed byNuance or third parties as well as distribution of international brands of wine and liquor to hotels and other wholesalersas may be permitted by Foreign Direct Investment Regulations.”

The Nuance Group Executive Vice President Business Development &Strategic Marketing Carlo Bernasconi commented: “The signing of thisMoU with Shopper’s Stop Ltd is a first milestone for The NuanceGroup’s entry into the dynamic growth market India. We are convincedthat together we will be able to create a truly unique offer perfectlytailored to the needs of the customers at Indian airports.”

Shopper’s Stop Managing Director BS Nagesh added: “We believe withthis partnership we will extend our unique shopping experience to theairports and touch the lives of millions of travellers. This will also helpus create a larger footprint across the country.”

Interest in India is at an all-time high in the travel retail industry thanksto a flurry of contract tenders allied to airport privatisations due to takeplace over the short and medium term. Earlier this month State Minis-ter for Civil Aviation Praful Patel said that the country’s airline passen-ger traffic was set to increase by at least +25% on an annual compoundgrowth basis over the next decade.

INDIA. The Indian duty free industry was dealt another blow lastweek when the Bombay High Court ruled that the India TourismDevelopment Corp (ITDC) must obtain a licence for the sale of foreign



liquor at Chhatrapati Shivaji International Airport in Mumbai. The judge also ruled that ITDC must pay duties forliquor sold at the store from 2001. The court case arose after ITDC filed a petition against letters sent by the BombayState Government in November 2001 and April 2002 instructing the state-owned retailer to pay excise duty on the saleof liquor. An industry source said that the development was “highly detrimental to the growth and prosperity of theIndian duty free industry”, especially since liquor is such a key revenue-generating category.

ITDC is not alone in being slapped with tax demands. Flemingo is battling against the State of Kerala’s demands forsales taxes on duty free turnover at the company’s Trivandrum and Calicut airport stores. And at Chennai Airport thecompany is being asked by the State of Tamil Nadu to pay sales taxes of INR52.7 million (US$1.2 million).

POLAND. In late breaking news Inflight Service has expanded its operations in Poland with the opening of a shopat Wroclaw Copernicus Airport. The 40sq m fragrances and cosmetics outlet opened to passengers last week, with anofficial opening planned for next Monday. The airport caters to a rapidly growing number of low-cost passengers.Inflight Service Managing Director Peter Candell told The Moodie Report: “It’s a small shop but the location has a lotof potential. It’s a very interesting and dynamic region.” See www.TheMoodieReport.com for full story

RUSSIA. Lenrianta, the Aer Rianta International and Pulkovo Aviation joint venture in St Petersburg, opened anew duty free store at St Petersburg-Pulkovo Airport last Friday. The 149.5sq m store is located in the internationalsection of the sprawling Terminal One, complementing the main existing store. The international area serves CISroutes and a number of charter flights to destinations such as Turkey, Greece, Israel, Cyprus and Dubai.

Lenrianta also operates the main duty free store in T2, plus a number of smaller duty free and duty paid stores acrossboth terminals. The new outlet, located upstairs, will bolster the main T1 store, which is currently dominated by astrong perfumes and cosmetics offer as well as a stand-alone Swarovski unit and limited amounts of liquor, confec-tionery, tobacco and other items. The new store will sell all items except fragrances & cosmetics – and it has goodprospects, General Manager Liam Flood told The Moodie Report. “This terminal has real potential to grow,” he said.“The charter business is growing and the CIS business is growing.” Note: Lenrianta is the subject of a major profile byThe Moodie Report.com, coming soon.

RUSSIA. In other Russian news, travel retailers are preparing for the implementation of changes to product labellingthat have far-reaching implications for the business. From the summer of 2005 an exemption for duty free productsfrom revised domestic market labelling requirements for items containing alcohol was removed. In theory that meantthat all duty free products containing alcohol – including fragrances – must contain special back labels on the bottle orpack. These include a range of consumer safeguard information in Russian script, including country of origin, ingredi-ents, health-related details, date of manufacture and sell-by date.

Duty free retailers across Russia are formulating different responses to thechallenge. Aer Rianta International, for example, is asking its suppliers toapply labels to all bottles or packaging as appropriate in advance. It wouldlike to see a 1 July implementation but acknowledges there cannot be a hardand fast date for such complex changes. Gebr Heinemann told The MoodieReport it is planning to produce and apply the labels itself but is notworking to a specific cut-off point. Head of CIS Sales Department PierreViarnaud said: “The law passed last summer now applies to duty free andwill be applied by us as soon as possible but with no defined deadline.”

Liam Flood, General Manager of Lenrianta, Aer Rianta International’sjoint venture in St Petersburg, told The Moodie Report: “Long termwe would see it as the suppliers’ responsibility to produce the labels forduty free. Many suppliers are already doing this for the domesticRussian market and the information provided on these labels is essen-tially the same. However, it devolves on us to tell all our suppliers theprecise labelling requirements to comply with the legislation.

“While we are working to a date of 1 July, it is doubtful whether allsuppliers will be ready by that date. We’ll possibly have to rely on theauthorities to give us some leeway.” He said some suppliers, such asPernod Ricard and Diageo, are close to being able to produce the dutyfree labels on behalf of retailers.

SOUTH AFRICA/BARBADOS. Tourvest has acquired a 60% interest in Ganzee, a leading souvenir storeoperator in Barbados, for R13 million (US$2 million), subject to regulatory approval. Tourvest, a powerful and diverseSouth African duty free-to-tour group company, said this is the first step in the planned international expansion of itsdestination retail business.

Ganzee (Caribbean slang for T-shirt) has 13 stores in Barbados, including outlets at the cruise ship terminal and theinternational airport, as well as two outlets in Granada and one in Tortolla. It was previously owned by the CaveShepherd group, one of the largest travel and duty free retailers in the Caribbean, which remains a shareholder and willplay an active part in the development Tourvest plans for Ganzee.

Eric de Jager, Managing Director of Tourvest’s Retail Merchandising Division, said that Tourvest was acquiring not justa successful business in Barbados but a “beachhead into the entire Caribbean”, one of the world’s premier tourismdestinations. The region attracted 36.5 million visitors in 2005, many times the South African figure of 7 million forthe year, Tourvest said.

“We see the Caribbean as a single market in terms of the retail potential opportunity,” de Jager said. “Ganzee has a goodinfrastructure with effective logistics, IT, personnel and financial management, and this will serve as a solid base for therapid expansion we have in mind. Our aim is ultimately to grow into the leading destination retailer in the Caribbean.”

De Jager noted that Tourvest was already Southern Africa’s dominant destination retailer, with 60 specialist storeslocated at all key tourism hubs from Cape Point to the Victoria Falls. The Caribbean is a major tourist shoppingdestination, but the current destination merchandise offering is largely undifferentiated, with most of it being sourcedfrom the same US wholesaler, he said. Tourvest will offer consumers a wider choice and provide those who visit anumber of islands with differentiated products. “Another area in which we can add considerable value to Ganzee is inthe development of distinctively attractive store design themes,” de Jager said.

“Our first priorities will be to introduce new ranges of merchandise – with a strong emphasis on the current interna-tional trend to lifestyle gifting and homewares – into the existing stores and to develop an expansion strategy in con-junction with our partners Cave Shepherd. At this stage our intention is to grow the store network from 16 to 35within five years.”

Editor’s note: Elsewhere Tourvest is one of five companies believed to be bidding for the Singapore Airlines duty freeconcession. The carrier has not made a final decision whether to outsource but, as reported, The Moodie Reportbelieves five companies – Tourvest, King Power Traveler, Inflight Sales Group, Nuance-Watson (Singapore) andDFASS – are being considered.

UAE. Dubai Duty Free has chosen Oracle Retail Warehouse Manage-ment System to streamline its back office IT functions and the movementof merchandise and data. The system will be deployed in the 27,000sq msemi-automated Distribution Centre being built by the retailer to sup-port its growing retail business at Dubai International Airport.

Dubai Duty Free said the move would support its drive towards thisyear’s target of US$670 million in sales, a projected rise of +13.5% on2005 figures. Dubai Duty Free Managing Director Colm McLoughlinsaid: “Delivering uninterrupted growth has been an important part ofour success so far, and using the power of technology has been a keyelement of this success.”

The Oracle Retail Warehouse Management System coordinates themovement of goods through the warehouse and ensures supply issuesare dealt with before they result in gaps on the shelves. “With over20,000 unique items of merchandise, the new system will be critical inaccelerating and optimising the flow of goods from store to shelf,reducing lead times, freeing up people to focus on other areas, andultimately eliminating lost sales due to out-of-stock situations,” saidDeputy Managing Director George Horan.





THE MOODIE REPORT TENDER & CONTRACT NEWS

RUSSIA. Sheremetyevo International Airport Company has called a tender for new and additional space atSheremetyevo Airport Terminal One. Bids close on 19 June. The space is in a new terminal area, and will provide anadditional retail offer to that of the three existing duty free operations run by Aer Rianta International joint ventureAerofirst (trading as Moscow Duty Free), Regstaer and Port Alliance, the latter two supplied by Gebr Heinemann. AerRianta International Retail Operations Director Bill Maxwell confirmed to The Moodie Report that Aerofirst would bebidding for the new business.

Sheremetyevo was opened in 1959 and T1 opened in 1964. It serves international and domestic routes. Sheremetyevo 2houses the main duty free operations, including the pioneering Moscow Duty Free store which opened to great acclaimin the late 1980s. The construction of the long-awaited Sheremetyevo 3 terminal is set for completion by 2007. Nofinal decision has yet been reached on duty free operations there, though Aerofirst is certain to have a strong positiongiven that one of its shareholders, Aeroflot, will control the new facility.

UK. Tourvest Duty Free has added BMed Airlines to its list of inflight sales concessions. BMed operates out of Lon-don Heathrow Airport and is a franchise partner to British Airways. The planned launch date for the first programme isbelieved to be 1 October. More details next week.

UK. Alpha Airports Group has significantly enhanced its World News offer at London Heathrow Airport, increasingfloor space in its Terminal Three store by more than +20%. The new-look store, opened on 19 May following acomplete redesign, has expanded from 2,291sq ft to 2,790sq ft. In partnership with airport owner BAA, £400,000 hasbeen invested into refreshing the look and feel of the store and improving the shopping experience for passengers.

A major development has been the introduction of ‘World News Airplay’, an instore plasma screen network which runscontinuous promotional messages and flight departure information on screens positioned in key locations throughoutthe store, including the entrance, cash desk and shelving areas.

The store’s core category ranges of books and newspapers/magazines have benefited from redesigned shelving and asimplified layout, allowing increased stockholding capacity. Almost 30% of the store is now dedicated to books; theadditional floor space has also enabled World News to offer a more comprehensive product range including souvenirs,travel accessories, stationery and greeting cards.

Tills now operate with an electronic call forward system which, in conjunction with the store’s newly installed IRIS EPOSsystem, is expected to increase customer through-put speed significantly. For full story see www.TheMoodieReport.com

UK. BAA Retail/World Duty Free has turned to British celebrities in a new summer online campaign to promoteairport shopping. Three films went live this week on www.baa.com/shopping featuring British celebrities. Readers canview all of them at www.TheMoodieReport.com – go to ‘Features’.

“The films are designed to be an engaging visual experience around airport shopping, encouraging customers tobecome (a) inspired (b) intrigued and (c) more likely to spend money airside pre-travel,” said BAA Marketing Commu-nications Manager Mark Aldridge. Among the celebrities taking part in the films are Colin Mcallister and Justin Ryan,who are the faces of UK television’s Channel Five and star in popular TV programme How Not To Decorate. The duowere selected for their style, enthusiasm and bantering approach, according to BAA.

Other celebrities endorsing airport shopping include supermodel Jodie Kidd and TV presenter Gabby Logan. Eachfilm will carry the BAA logo on the opening and closing frames and throughout the content both the BAA and WorldDuty Free brands will be prominent.

In addition supporting advertorials, webchats, radio interviews and online media are designed to drive people towww.baa.com to explore all services, directing them to the shopping pages to download each film. The discount vouch-ers available on the site will help promote the World Duty Free brand, according to Aldridge.

“We are supporting the launch date with radio and webchat broadcasts. Colin and Justin will be syndicated to over 120radio stations and ten key websites for webchats and interviews,” said Aldridge. “The webchats and online interviewscan remain on a website for up to a month with pre-promotion commencing up to a week before.”



US. The State of Hawaii is preparing to re-bid the DFS-operated Statewide In-Bond Concession for Hawaii’s air-ports. The retailer this month began a one-year extension of its current contract, which will take it to 31 May 2007. Aspokesman for the State of Hawaii Department of Transportation Airports Division told The Moodie Report: “TheState of Hawaii exercised its rights under the holdover provision of the Statewide In-Bond Concession Agreement toextend the term of that contract for a single year.

“The State felt this was appropriate as DFS opened its new 10,000sq ft main store at Honolulu Airport in January 2005and to offer a contract for bid six months or so later would not give potential bidders much of a track record to evaluatethe impact of the new store. The holdover provision ends May 31, 2007. We are hoping to have documents readyshortly for a new contract to begin on 1 June 2007.” In 2003, when its contract was re-tendered, DFS struck a 32-month deal with the State of Hawaii after it was the sole bidder for the business.

Gross sales for calendar year 2005 under the duty free concession were US$36.6 million on-airport and US$149.4million off-airport. DFS has a separate master retail contract at Honolulu International Airport, which it extended forthree years in March, taking it to March 2009. Under the new three-year deal DFS will pay a monthly guarantee ofUS$829,166 or 20% of gross receipts.

At Jorge Chavez International Airport, Lima, Peru

Lima Airport Partners, one of the world’s most ambitious airport companies, is seeking brands and commercial partners to maximise the revenue opportunities from this pioneering concept.

For full details see the exciting story at www.TheMoodieReport.com; or contact Jan Laufs at [email protected]

ANNOUNCING A NEW CONCEPT IN AIRPORT VIP SERVICE LOUNGES

THE VIP CLUB

THE MOODIE REPORT FOOD & BEVERAGE AND OTHER COMMERCIAL REVENUES

CANADA. Autogrill Group, through its US subsidiary HMSHost Corporation, has agreed to buy the airportoperations arm of Cara, a leading Canadian food & beverage services group. The company will buy Cara’s AirportTerminal Restaurant Division (ATR), which operates travel concessions in North America, at an enterprise value ofabout C$62 million (US$55 million) – between six and seven times EBITDA. Closure of the deal, subject to anti-trustapproval, is expected in the second half of 2006.

Under the terms of the agreement HMSHost (through its subsidiary, Host International of Canada) will acquire ATRcontracts at nine airports: Calgary, Edmonton, Kamloops, Montréal, Ottawa, Saskatoon, Toronto, Vancouver andWinnipeg. The ATR contracts, which cover 90 retail outlets, generate C$74 million (US$66 million) in sales and more



THE MOODIE REPORT GENERAL NEWS

than C$9 million (US$8 million) in EBITDA. The main licensed brands include Sbarro’s, ToAst!, Second Cup and TimHorton’s. The best known proprietary brands include Kelsey’s, Milestone’s, Swiss Chalet and Harvey’s. HMSHost willenter three of Canada’s main airports – Ottawa, Edmonton and Winnipeg – which it said would generate “powerfulsynergy” with its existing operations in Calgary, Montréal, Toronto and Vancouver, bringing the total of its Canadianairports to ten.

With around 90 million passengers in 2005, 40% of them on international flights, Canadian airports are forecastingannual traffic increases in the medium to long term (until 2018) of +3–4%, in line with GDP growth. The biggestincreases are expected in the three main airports of Toronto, Vancouver and Montréal.

PERU. Lima Airport Partners (LAP) and its lounge operator Inversiones FISA are launching a unique and ambitiousVIP Service Lounge called The VIP Club at Lima’s Jorge Chavez International Airport (JCIA) – and it has repeated acall for commercial partners through The Moodie Report.

Jorge Chavez International is one of South America’s fastest-growing and most ambitious airports. It handled almost 5.7million passengers last year, of which nearly 3.3 million were international. This year has seen an acceleration of recentgrowth with +5.9% and 5.2% year-on-year increases for international passengers in January and February respectively.

Lima Airport Partners Commercial Manager Jan Laufs told The Moodie Report: “We are looking for a dynamicpartnership with brands who would like to use the lounge platform to promote their products. The presentation formcan be via fixed materials but preferably through events – tastings, happenings etc. And of course there is the possibilityto have cross promotions with existing operators selling the brand, such as duty free retailer Aldeasa or food & bever-age and destination merchandise specialist Cafe Britt.” For details type in ‘Lima’ into the Advanced Search Engine atwww.TheMoodieReport.com or e-mail Jan Laufs at [email protected]

UK. SSP has opened a new real food company outlet at Newcastle International Airport. It serves a wide range of foodsand drinks, with an emphasis on freshness. An on-site bakery prepares freshly baked cakes and muffins, the deli counterserves fresh salads and sandwiches, freshly cooked meat is on offer at the carvery, while a juice bar, serving freshlysqueezed orange, adds a touch of theatre. A chocolate fountain for dipping fruit kebabs or croissants is described as “amust for chocoholics”. The hot drinks section is situated after the till point, so customers can choose a hot drink attheir leisure, and refills are free.

The food service areas are split into six instantly identifiable sections to make selection easier and to improve speed ofservice: n grab.me – a selection of ready prepared sandwiches, salads, drinks and snacks for customers looking to ‘grab and go’n bake.me – a selection of freshly baked cakes, pastries and muffins nmake.me – a deli bar with a selection of fresh salads and sandwichesn hot, hot, hot – hot foods including a traditional cooked breakfast, freshly cooked meats and beer battered cod served

with potato wedgesn juice.me – the theatre of the real food company where staff squeeze fresh orange juice and smoothies for customersn cork.me – a selection of wines from around the world

Newcastle International Airport Head of Commercial Nicola Boulter said: “We are delighted with the arrival of the realfood company, it has brought the concept of fresh, high quality food into a new league at the airport’s departure lounge.”

FINLAND/ESTONIA. The Tallink Group has reached an agreement with Sea Containers Ltd to buy the stockof Silja Line for €450 million and 5 million Tallink shares. Tallink Board Chairman Enn Pant said that Tallink and Siljawould together create the leading shipping company in the Baltic Sea area.

Tallink’s strength lies in routes between Estonia and Finland, Estonia and Sweden and Latvia and Sweden. Silja has aleading position between Finland and Sweden. The integrated company will be the leader in the cruise and passengertravel market on routes between Estonia, Finland, Germany, Latvia and Sweden.

Travel onboard Tallink, Superfast and Silja ferries will continue as usual. There are no changes planned in schedules orroutes. The vessels will sail under their current flags. The transaction will not include the SuperSeaCat fast ferryservices between Helsinki and Tallinn, which will continue to be operated by Sea Containers.



Silja has struggled to replace the portion of duty free sales lost through intra-EU duty free abolition. Retail revenue hasbeen hit by a drop in revenue from the key spirits sector in particular. Inflight Service operates a purchasing pool thatserves both ferry companies with travel retail goods.

Tallink operates 15 vessels in the Baltic Sea region. The company carried 3.2 million passengers in the financial yearending August 2005. Silja, including SeaWind Line, operates six vessels between Finland and Sweden. The passengervolume on these routes was 3.4 million last year.

HONG KONG. Search Investment Group, owned by DFS Group co-founder Robert Miller, said last week that itplans to raise a US$200 million fund to invest in Asian private equity funds. Miller still owns 38.75% of DFS, theworld’s leading duty free retailer. Search Investment will put in US$40 million to the new fund and raise the rest frominstitutions and endowments, Dow Jones reported.

Miller, who founded DFS – then Duty Free Shoppers – with Charles Feeney in the early 1960s, established the SearchInvestment Group in the early 1970s. It seeks “superior, risk-adjusted returns in alternative strategy investments, privateequity funds, special situations and direct investments”.

HONG KONG. Cathay Pacific Airways is to pay US$1.58 billion to buy rival Hong Kong carrier Dragonair anddouble its stake in Air China, adding 21 routes in the world’s second-largest aviation market. Asia’s second most prof-itable airline will buy the 82% stake in Dragonair it does not already own for HK$8.22 billion (US$1.1 billion) in cashand stock and pay HK$4.07 billion to increase its Air China stake to 20%, the airlines said. Air China will pay HK$5.39billion for 10.2% of Cathay Pacific.

Cathay will gain access to cities such as Shanghai and Tianjin, making it the dominant non-Mainland controlled airlinein China. Cathay Chairman Christopher Pratt told reporters in Hong Kong: “We badly wanted a significant presencein mainland China.” Dragonair’s network “fits very, very well,” he said.

Air China, based in Beijing, is facing more competition as China Southern sets up a hub in the Chinese capital. BritishAirways is among international carriers that are adding flights to China as the country opens up its aviation market.The World Tourism Organization forecasts that 100 million Chinese people will travel abroad each year by 2020, upfrom about 20.2 million in 2003.

PEOPLE, EVENTS & NOTICESTHE MOODIE REPORT

AUSTRALIA. Bacardi Lion, the premium spirits joint venture between Bacardi Martini and Lion Nathan inAustralia, has announced a number of senior appointments. Fernando Navarro has joined the company as Senior BrandManager, and Suzie MacDermott replaces Trent Russell as Marketing Manager. Russell has started a new role asMarketing Director of Bacardi Martini, China, based in Shanghai.

FRANCE. L’Oréal has announced two important new appointments within the L’Oréal Luxury Products Division.Odile Roujol has been appointed to head Lancôme International, replacing Marc Dubrule, who is now in charge ofthe newly-created Strategic Development Department.

Roujol joined Lancôme in 1996. Appointed General Manager of Lancôme France in 2001 and Deputy General Manag-er of Lancôme USA in 2003, she has gained operational business experience in two highly competitive markets. Sinceearly 2005, she has been Deputy General Manager of Lancôme International to Dubrule.

The Strategic Development Department, part of the Luxury Products Division, will have three main tasks: prospective,potential acquisitions strategy and advice and assistance to the company’s two Asian brands, Shu Uemura and Yue Sai.Dubrule joined the L’Oréal group in 1986. From 1997 to 2000, he ran the L’Oréal Luxury Products Division in SouthKorea before taking over the General Management of Biotherm International and that of Lancôme International sinceMay 2002.

HONG KONG. Dr David Pang, Chief Executive of Airport Authority Hong Kong, is to leave the role after hissecond three-year term expires. He has opted not to seek a renewal of his contract. Airport Authority Hong KongChairman Dr Victor Fung is to head a committee charged with a global search for a replacement. Fung said: “Davidhas built a solid process-driven organisation, which has led Hong Kong International Airport (HKIA) to consistentlyimprove its financial and operational performance.



“Under the guidance of the Board and with the support of the management team, David has re-defined HKIA’s busi-ness, market and product, creating a very strong foundation for our airport to achieve long-term sustainable growth.”Pang was the driving force behind HKIA’s recent development – including the new SkyPlaza complex – and a keyinfluence on the commercial growth of the airport. During his tenure he made it a priority to grow the non-aeronauti-cal portion of HKIA’s revenues.

INTERNATIONAL. The Moodie Report.com hassmashed its previous weekly and monthly visitor traffic figures.In May a record 87,994 page views (the number of individualpages looked at on the site by the worldwide readership) wererecorded, an extraordinary 12,710 higher than the previoushigh set in March 2006. Visits also reached an all-time monthlyhigh of 22,539 as did unique users (8,113).

The week commencing 5 June was another record-breaker.Page views hit a record 20,817 in the seven day period, beatingthe previous high of 20,398 set in April. Visits reached 5,291and total users were 2,702. All The Moodie Report.com’svisitor traffic figures are independently produced and availableto any business partner.

INTERNATIONAL. The airport industry’s mostimportant commercial revenues conference, the ACI Business& Trinity Forum, a pioneering partnership between AirportsCouncil International (World) and The Moodie Report, will heheld in Dubai on 11–13 March, 2007. The event will includefilm, workshops and a Gala Dinner in which the Airport ServiceQuality (formerly AETRA) awards will be presented. Anextraordinary and ambitious programme – “not just anotherconference” – is promised. Please reserve the dates now.

INTERNATIONAL. Time is running out to vote in theFrontier Awards, the travel retail industry’s own ‘Oscars’. For the first time this year, the organisers, Frontier magazine,are using a popular vote to draw up a shortlist for the top award, the Airport/Land-Based Retailer of the Year. Voting isbeing conducted through a link on the home page of The Moodie Report.com

The merits of the shortlist will then be considered by a high-qualityjury consisting of: Luxottica Group Duty Free Manager Martha Rosas;Korean Air Vice President Inflight Sales Division Heather Cho;Aldeasa Jordan CEO Pedro Castro; Altadis Global Travel RetailManager Jean-Philippe Aucher; William Grant & Sons Duty FreeDirector Ylva Binder; and The Nuance Group Vice-President BusinessDevelopment Carlo Bernasconi. The voting deadline is 23 June andanyone in the industry is entitled to a single vote, selecting their topthree operations.

SOUTH AMERICA. ASUTIL, the South American Duty FreeAssociation, has unveiled a strong programme for its annual conferencedue to take place in Chile on 6–9 September.

Highlights include the results of a specially-commissioned study ofperfumes and cosmetics consumers across Argentina, Brazil, Chile andUruguay. Kenzo, P&G, Estée Lauder, Essence Corp and Parbel willeach offer their preliminary conclusions on the findings. José LuisHermoso, Senior Analyst of London-based International Wine &Spirit Record, will examine the future of the category in Latin Americadomestic and duty free markets. InterBaires President and CEOEnrique Urioste will examine the walkthrough duty free store conceptand ask where it is headed next.

DUBAI, UNITED ARAB EMIRATES11-13 MARCH 2007

The world’s most ambitous airport commercialrevenues conference

Top representatives from the ‘Trinity’ - airports,concessionaires, brands

Featuring the presentation of ACI’s Airport ServiceQuality (formerly AETRA) Awards

•

•

•

For details please contact ACI’s Andreas Schimm at [email protected] or The Moodie Report’s

Martin Moodie at [email protected]

The Moodie Report:Nationality of visitors to website May 2006

Rank Country Rank Country

1 UK2 US3 France 4 Switzerland 5 Australia 6 Spain 7 Singapore 8 Hong Kong9 Canada10 Germany

11 UAE12 Netherlands 13 Ireland 14 Japan 15 Italy16 Belgium17 India 18 South Korea19 Sweden20 Cyprus

Source: ©The Moodie Report

The Moodie Report:Website traffic May 2003–May 2006

Statistic May ’03 May ’04 May ’05 May ’06

Page views 13,636 36,714 58,880 87,994Visits 2,645 6,828 14,501 22,539Unique users 1,260 2,891 5,063 8,113

Source: ©The Moodie Report



DESERT ISLAND DUTY FREETHE MOODIE REPORT

To set the scene: The Moodie Report is by definition a ‘serious’ read – but in an industry full of personalities it’s nice also tosometimes touch on the human and lighter sides of the business. So in the spirit of the popular UK radio programme ‘Desert IslandDiscs’ in which interviewees select the music they would take with them to that island, The Moodie Report has unveiled its own ver-sion as our signature sign-off to each issue. But instead of music, our guests have to choose one item in various duty free categories.

This week’s island castaway is Rémy Cointreau Global Travel Retail Director Peter Sant, a highly popular figure never usually shortof company. But on the island he may be – once again, though, the duty free industry comes to the rescue…Accessory: Sony portable TV to watch England lose the 2006 World Cup and win the real one [rugby, and no comment – Ed…]in 2007.Book: ‘1001 Things To Do On A Desert Island’ by R. Crusoe.Confectionery: Orange After Eights and a box of Celebrations, allowing me on my island to a) take out the After Eights andleave the wrappers in the box and b) choose my favourite Celebrations without competition.Cosmetics: D Stress by Biotherm - because I'm worth it.DVD: Anything by Quentin Tarantino.Fashion item: It is tough being such a fashion icon and having my industry colleagueswanting me to don their latest creations. I guess I would need to mix a little here andgo for Boss, Zegna and Zilli, sporting a combination of shoes, shirts, suits and ties. Willalways need to look smart in case someone drops by!Fragrance: Allure Sport by Chanel. I wear it once a day, not just because it smellsgreat, but also because it's important to do sport and exercise regularly at my age.Spirits: Absolutely no question here; a bottle of Rémy Martin Louis XIII Cognac, theworld's finest spirit in my humble opinion.Tobacco: Havana cigars to go with my Rémy Martin Louis XIII.Wine and/or beer: A mixed case of (’88, ’89 or ’90) Château La Lagune and ChâteauLagrange, both third growth Bordeaux, excellent value for money.Watch: A Suunto diving watch for obvious reasons.

Thank you for your readership and support of The Moodie Report.

Martin Moodie, Editor

There is much, much more – it’s an excellent line-up put together by the ASUTIL board – and the complete pro-gramme can be found at www.TheMoodieReport.com. Any queries should be addressed to ASUTIL General SecretaryJosé Luis Donagaray at [email protected] or visit www.ASUTIL.org

SWITZERLAND. Nigel Keal has commenced his role of Procurement Director at Dufry as of 12 June, afterserving six months’ garden leave at his former company World Duty Free. Keal, 46, has almost 20 years’ experience in thetravel retail industry. He held several management positions with Allders International for 13 years before moving to BAA-owned World Duty Free, where he achieved excellent results as Head of Category for perfumes and cosmetics. “One ofNigel Keal’s main attributes in his new role will be his good relationships with suppliers,” said Dufry in a statement.

UAE. Niveen Ibrahim has been named General Manager of Abu Dhabi Duty Free. A long-serving and respectedexecutive of the company, she was formerly Business Development & Marketing Manager of Abu Dhabi Duty FreeAirport Catering & Duty Free. Paul Hines has been named General Manager of Inflight Catering. Both will report toManaging Director Mohamed Mounib.

Other changes see James McLean, formerly Manager Operations Analysis & Yield Management, promoted to Com-mercial Manager and Karen Fairman promoted to Buying and Merchandising Manager. Richard Isaac is namedRetail Development Manager. Public Relations Manager Angela Bothma is promoted to support Niveen Ibrahim inthe marketing function.

Mohamed Mounib told The Moodie Report this morning that the changes would allow him to focus on strategic issuesand expansion plans. “The appointment of the two General Managers will give me time to work in a different manner,”he said. “We have Terminal Three coming up and then the new airport which is supposed to be open in 2010, so I havea lot to do personally in terms of business development and structuring long-term partnerships. The General Managerswill have the authority to conclude business in their respective areas and will be fully accountable for them.” The wholeduty free team is being consolidated in the office building used by Mounib near Abu Dhabi International Airport in thecoming month. More details coming soon.

Documents

THURSDAY 15 JUNE 2006 WELCOME FAST, FACTUAL, FREE