THURSDAY 26 JULY 2007 WELCOME FAST, … 26 JULY 2007 FAST, FACTUAL, FREE ... the gateway to India’s ... The same tagline has been given to APTRA’s forth-

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THURSDAY 26 JULY 2007

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.

Duty Free Americas has under-lined its determination to makeits big retail invest-ment at the Venet-ian Macao Resort-Hotel pay off withthe high profileappointment of former LuxotticaDuty Free ManagerWorldwide Martha Rosas. IfMartha Rosas brings even halfthe exhuberance and profession-alism she brought to the eyeweargiant, the Falic family’s Asiandebut will be a successful one.

“It will be a landmark in Indianaviation and we will be as goodas any internationalairport anywhere ifwe achieve whatwe set out to do.”GMR and Hyder-abad InternationalAirport LimitedGeneral ManagerRetail & Commercial KeshavThapa underscores the deep am-bition the consortium has for thenew greenfield airport (page 6).

“The passenger flow is very clearto the gates and yet you cannotavoid the commer-cial temptation.”Another Indiangreenfield airport,this time BangaloreInternational,where CEO AlbertBrunner (page 7)tells The Moodie Report thatcommercial revenues lie at thevery core of the new develop-ment – a distant cry from theirafterthought status (at best) atmost existing Indian airports.

QUOTES OF THE WEEK

PERSONALITY OF THE WEEKWELCOME to The Moodie Report. We’re still buzzing from last week’s whistle-stop tour of four Indian airports – or, in some cases, airports-in-waiting. India’s momentis now. With the economy booming, travel numbers surging and organised retail makingbelated but giant strides, the aviation sector is witnessing a ground-to-air revolution.

The Times of India described it as ‘zoom power’, revealing that 100 new airports will bebuilt in so-called ‘tier-2’ cities (which in population terms would be ‘tier 1’ anywhereelse) in the next few years, incremental to India’s 127 existing airports. The northeastregion alone will see an amazing 26 new airports or airstrips. The phenomenon is beinggiven real impetus by the new greenfield airports in Bangalore and Hyderabad and theambitious redevelopments of Delhi and Mumbai airports. Each is a very differentproposition – two offer glorious amounts of development space whereas revampingMumbai’s cramped Chhatrapati Shivaji International Airport, the gateway to India’sheaving commercial capital, is hugely complex.

“We have domestic air traffic growing at +30% and international traffic growing atdouble the international average,” says Rudy Vercelli, Chief Operating Officer for theGVK consortium driving the Mumbai project. That’s the good news. Now listen to this.“We have no spare space, additional land or greenfield areas. We have to build increasedcapacity and increased levels of service for what [traffic] exists now. Then consider thatwe’re growing at +25% over average a year.”

Complex? You ain’t heard nothing yet. “Inside the airport boundaries we have over80,000 dwellings and about 350,000 people – you’re talking about a city living inside theairport.” But Vercelli, a veteran of privatisation business, isn’t fazed by the difficulties.“If I sit here complaining about my problems I should be doing something else. Youidentify the problems, then you find the solutions.”

That spirit was embodied by all the managers, international and Indian, that I encountered.To walk the giant construction sites that are Bangalore and Hyderabad airports, to scaletheir giant air traffic control towers, to gaze in wonder at an ant-like labour force of 6,000working around the clock, to view the plans for associated infrastructure development, wasto marvel at a transformation as profound as anything the airport sector has ever seen.

Like Vercelli, each of the management teams is faced with constant frustrations. But theprojects will be delivered, each will witness further expansion phases, and – on this you canbe assured – the commercial opportunities will flourish. ‘Incredible India’ is the theme ofthe government’s tourism campaign. The same tagline has been given to APTRA’s forth-coming India Duty Free conference. For once the hype is verging on understatement.

A historic image taken on the runway at the green-field Bangalore International Airport in India lastweek. Eight months from now planes will be land-ing and taking off here as one of the country’s mostambitious airport developments opens for business.Pictured during a site visit are (left to right) TheNuance Group Executive Vice President BusinessDevelopment & Strategic Marketing Carlo Berna-sconi, HMSHost Asia Managing Director SuredjAutar, The Moodie Report Publisher Martin Moodieand HMSHost President & CEO Elie Maalouf.

Image of the WeekImage of the WeekImage of the WeekImage of the WeekImage of the Week

SOUTH KOREA. Visitor arrivalsedged ahead by +1.6% in May, but thekey Japanese sector fell by -10.6% to176,280, according to the KoreaTourism Organization. The Japanesemarket is key to South Korean travelretailers, accounting for 33.6% of visi-tors in the month.

The next biggest group was the main-land Chinese, representing 16.0% ofvisitors. Chinese arrivals climbed by animpressive +14.3% year-on-year to83,845. Taiwanese numbers continuedtheir sharp decline, falling by -11.9% to22,719 (4.3% of the total).

For the first five months of 2007 totalvisitor arrivals were up +1.3% to2,492,252. Of those key Asian nationali-ties, Japanese visitors eased by -2.3% to909,123, mainland Chinese rose +10.4%to 374,798, and Taiwanese traffic fellaway sharply by -16.1% to 118,567.

The softness of the Japanese Yen againstthe Korean Won has been a key factor in this year’s decline in Japanese arrivals. The Won has risen by about +4% againstthe Yen in 2007 to near-ten-year highs. Last month the Bank of Korea’s Senior Deputy Governor said that he was con-cerned about the Won’s strength against its Japanese counterpart, but insisted that the central bank would not intervene.

The Yen/Won rate is linked to the Yen/US Dollar rate, which currently [25 July] stands at ¥120.48 – bad news for anyretailer selling to a Japanese clientele in US Dollars or related currencies.

HONG KONG. Hong Kong International Airport showed robustgrowth in passenger traffic in the first six months of 2007 compared tothe same period last year.

Passenger throughput increased by +6.4% to 22.7 million in the half,and aircraft movements rose by +4.4% to 143,000. In June passengertraffic rose to 3.85 million, up by +5.7% from June 2006.

Airport Authority Hong Kong CEO Stanley Hui said: “Looking aheadwe expect robust outbound passenger volumes as Hong Kong peopletake summer holidays, and strong inbound traffic from Europe, theMainland and Southeast Asia. Over the summer we will offer a range ofspecial events and activities to ensure that individuals and families havea pleasant and memorable airport experience.”

Throughout July and August Terminals One and Two will feature magicshows, handicraft workshops, nail painting, story-telling, balloon art,temporary tattoos, a photo exhibition and more.

Thursday 26 July 2007The Moodie Report

Page 2The Moodie Report© is published by Moodie International. All rights reserved.Please send any comments or stories to [email protected]

THE MOODIE REPORT DATA ROOM – TRAVEL & TOURISM NEWS

Moodie Interactive: Click on the image above

Selected traffic numbers reported in the past three weeks

Country Airline/airport Jun ’07 vs Jun ’06 (%)

Source: ©The Moodie Report continued on page 6

Austria Austrian Airlines Group -3.4 (total pax)Canada Ottawa International Airport +3.0 (international)France Paris Charles de Gaulle Airport +4.2 (total pax)France Paris Orly Airport +3.2 (total pax)Germany Frankfurt Airport +0.1 (total pax)Hong Kong Hong Kong International Airport +5.7 (total pax)Italy Alitalia -1.0 (international)Jordan Royal Jordanian Airlines +14.6 (total pax)Lima Lima Jorge Chávez Airport +27.9 (total pax)Mexico Cancún Airport +4.1 (international)Mexico Cozumel Airport +19.8 (international)Mexico Mérida Airport -14.0 (international)Singapore Changi Airport +4.9 (total pax)Slovenia Adria Airways +13.8 (total pax)Thailand Bangkok Suvarnabhumi Airport +2.3 (international)Turkey Antalya Airport T1 +21.9 (international)UK Belfast International Airport +8..5 (total pax)UK Glasgow Prestwick Int. Airport -4.3 (total pax)UK Newcastle International Airport +5.5 (international)US Hawaiian Airlines +14.9 (total pax)

THE MOODIE REPORT

DATA ROOM – TRAFFIC NEWS

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INTERNATIONAL. Final year-end figures from Airports Council International (ACI) members show thatglobal airport passenger traffic reached an all-time high in 2006, increasing by +4.8% over 2005.

The 1,100 ACI member airports processed 4.4 billion passengers, 85.6 million metric tonnes of cargo and 72.2 millionaircraft movements, said ACI, demonstrating that performance is on track according to industry growth forecasts.

ACI Director General Robert J Aaronson said: “The statistics tell a great story of growth and stability. Three quartersof airports worldwide reported positive passenger growth. The figures are equally positive in broader economic terms,with traffic closely aligned to world GDP growth of just over +5% in 2006.”

The 2006 World Airport Traffic Report provides airport-by-airport and country-by-country traffic results and high-lights the top performers in each region. The report indicates that international passenger traffic grew by a brisk+6.8%, with strong markets in China, India and the UAE boosting results in the Asia Pacific (+9.7%) and Middle East(+8.6%) regions. If this trend continues Asia Pacific will replace North America as the region with the largest passengervolume within ten years. Tourism destinations drove traffic increases across the African continent, with Morocco bene-fiting from a new open skies agreement with the European Union.

Domestic traffic growth rates in most regions were largely aligned with international results, except in North Americawhere domestic traffic was flat for the year (+0.5%). Latin America and Caribbean enjoyed good domestic traffic results(+5.5%) but international traffic declined overall for the region due topoor results in Brazil related to carrier difficulties and air traffic con-trol shutdowns.

“In 2006 each region manifested trends that mirror improved globaleconomic growth,” said Aaronson. “Airports look forward to playing acentral role in a competitive environment as pillars of healthy localand regional economies, promoting new business development andstable employment.”

MEXICO. Grupo Aeroportuario del Sureste (ASUR), the priva-tised airport group which runs Cancún Airport and eight others insoutheast Mexico, has reported a Q2 passenger traffic increase of+15.3% compared to last year. International traffic rose by +8.5% anddomestic passenger traffic surged +25.5%.

The sharp rise primarily reflected the bounceback from the sharp dropin passengers during the second quarter of 2006, which was caused bythe lingering effect of Hurricane Wilma. Travel and tourism in Can-cún and the Mayan Riviera regions have since recovered; Cozumel’srecovery is continuing.

The +8.5% rise in international passenger traffic resulted mainly fromincreases of +8.1%, +29.4% and +10.2% at Cancún, Cozumel and


Top ten world airports by total pax 2006

Rank Airport Passengers Change

1 Atlanta (US) 84,846,639 –1.2%2 Chicago (US) 77,028,134 +0.7%3 London Heathrow (UK) 67,530,197 –0.6%4 Tokyo Haneda (Japan) 65,810,672 +4.0%5 Los Angeles (US) 61,041,066 –0.7%6 Dallas/Fort Worth (US) 60,226,138 +1.8%7 Paris CDG (France) 56,849,567 +5.7%8 Frankfurt (Germany) 52,810,683 +1.1%9 Beijing Capital Int. (China) 48,654,770 +18.7%10 Denver (US) 47,325,016 +9.1%

Source: Airports Council International

Top ten world airports by international pax 2006

Rank Airport Passengers Change

1 London Heathrow (UK) 61,348,340 +0.6%2 Paris CDG (France) 51,888,936 +6.2%3 Amsterdam Schiphol (Neth.) 45,940,939 +4.4%4 Frankfurt (Germany) 45,697,176 +1.9%5 Hong Kong Int. (China SAR) 43,274,765 +8.7%6 Tokyo Narita (Japan) 33,860,094 +25.3%7 Singapore Changi (Singapore) 33,368,099 +8.6%8 London Gatwick (UK) 30,016,837 +4.4%9 Bangkok (Thailand) 29,587,773 +10.3%10 Dubai (UAE) 27,925,522 +16.7%

Source: Airports Council International

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AUSTRALIA. Sydney Airport’s retail revenues roses +8.3% to A$168.8 million (US$148.8 million) in the year to30 June 2007, majority shareholder Macquarie Airports has reported. In the final quarter of the financial year retailrevenue grew by +10.4% to A$41.4 million (US$36.5 million).

Total airport revenue rose +9.9% to A$724.6 million (US$639.6 million) in the year, while Q4 revenue was A$179.7million (US$158.6 million), up +12.3%. EBITDA was A$585.8 million (US$517 million), a rise of +11.5% over theprevious corresponding period (pcp). Revenue per passenger across all operations was A$23.39 (US$20.65) for the year,up +3.3%.

Macquarie Airports CEO Kerrie Mather said: “Sydney Airport has produced an excellent result for the year to June2007. International traffic growth has shown a sustained recovery over the last six to nine months and we are particular-ly pleased with the +9.9% increase in revenue achieved for the year to June 2007 versus +6.4% growth in traffic,reflecting improved yields from all commercial businesses.

“Several important commercial initiatives were concluded during the year including completion of the T2 retail rede-velopment enhancing passenger choice, commencement of a new dutyfree contract with incumbent operator Nuance from 1 November 2006and completion of the new Qantas First Lounge.

“Exciting new developments are planned for the coming year, mostnotably the construction of a multi-storey car park in the InternationalTerminal precinct which is now under way and will provide around3,000 undercover parking spaces once completed in calendar year 2008.”

Growth of +9.3% in aeronautical revenue reflects continued strong passen-ger numbers in both the international and domestic markets, with Jetstar’snew international services and Etihad’s new Middle East services con-tributing to growth in international passenger volumes, said the airport.

MEXICO. Grupo Aeroportuario del Sureste (ASUR) has reportedthat total revenues for the second quarter increased year-on-year by+17.5% to MXN701.2 million (US$64.0 million). While aeronauticalrevenues rose by +11.7%, non-aeronauticals shot up by +32.5%, drivenby a +32.7% rise in commercial revenues. (Exchange rates at 26 July.)

ASUR classifies commercial revenues as those derived from duty freeservices, car rental, retail, banking and currency exchange, advertising,teleservices, non-permanent ground transportation, food & beverageand parking lots.


Huatulco airports respectively. Theincreases at Cancún and Cozumelwere principally due to favourableyear-over-year comparisons with the2006 base numbers affected by Hurri-cane Wilma. The increase in interna-tional passenger numbers was partial-ly offset by a -39.5% decrease inpassenger traffic to Oaxaca in thewake of social unrest in the region.

For the first six months of 2007 totalpassenger traffic rose by +21.5%compared to the first six months of2006, with international passengertraffic up +21.6%.

ASUR international passengers Q2 & H1 2007

Airport Q2 ’07 Q2 ’06 Change H1 ’07 H1 ’06 Change

Cancún 2,172,200 2,009,900 +8.1% 4,687,700 3,863,800 +21.3%Cozumel 126,800 98,000 +29.4% 270,400 162,400 +66.5%Huatulco 11,900 10,800 +10.2% 54,600 50,300 +8.6%Mérida 30,800 31,600 –2.5% 67,300 69,300 –2.9%Minatitlan 1,200 900 +33.3% 1,900 1,900 —Oaxaca 9,800 16,200 –39.5% 19,400 38,900 –50.1%Tapachula 1,100 1,100 — 2,300 2,400 –4.2%Veracruz 17,100 16,300 +4.9% 32,100 32,100 —Villahermosa 11,900 11,000 +8.2% 23,200 21,300 +8.9%Total 2,382,800 2,195,800 +8.5% 5,158,900 4,242,400 +21.6%

Note: Passenger figures exclude transit and general aviation passengers.Source: ASUR

THE MOODIE REPORT DATA ROOM – RETAIL & COMMERCIAL SALES RESULTS

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The second quarter commercial revenues performance is shown inthe table (left).

The growth in these areas resulted generally from the rise in passen-ger traffic and in particular from the opening on 18 May 2007 ofCancún Airport’s new Terminal Three. This facility includes extensivefood & beverage facilities as well as duty free retail (Aldeasa), special-ist retail and foreign exchange (American Express).

Retail revenues also benefited from higher concession fees chargedto local crafts and speciality shops. Revenues from car rental compa-nies increased due to improved economic terms with concessionairesand the opening of eight new commercial spaces in Terminal Three.The rise in parkinglot revenues waspartially due toannual rate increas-

es at several airports. The sharp rise in advertising revenue reflectsASUR’s direct sale of advertising space at its airports, which began inAugust 2006. Commercial revenues per passenger rose +15.1% toMXN42.41 (US$3.87).

Total first-half revenues increased by +23.3% to MXN1,381.3 million(US$126.0 million). This was mainly due to increases of +21.5% inaeronautical revenues (driven by a +21.5% rise in passenger numbers)and a +28.0% hike in non-aeronautical services (driven by a +28.3%rise in commercial revenues).

The commercial revenues rise breaks down as shown, right. Total com-mercial revenue per passenger rose +5.7% to MXN38.54 (US$3.52).

INDIA. India Tourism Development Corporation (ITDC) is preparing to expand its retail business into a number ofspecial economic zones (SEZ) and seaports. And the state-owned com-pany, which for many years enjoyed a monopoly over Indian duty freeretailing, is very close to finalising its joint venture with Spanish travelretailer Aldeasa. The partnership has won the rights to operate dutyfree shops at Mumbai International Airport, which is currently under-going a major refurbishment.

Vice President NK Piplani told The Moodie Report that the companywas highly optimistic about its future. Dismissing reports elsewhereclaiming there were doubts over the relationship with Aldeasa, Piplani said:“The scope of the Aldeasa/ITDC relationship will expand – the jointventure is for life, not for three or four years, and not for Mumbai alone.”

An article in the Economic Times of India this week reported that theITDC will open duty free outlets in the Mundra SEZ as well as theports at Kolkata and Haldia. “We have signed the two seaports and willopen in a month or two,” Piplani confirmed during a breakfast meetingwith The Moodie Report in Delhi.

ITDC also plans to bid for duty free outlets later this year at smallerairports, such as Pune, Nagpur, Mangalore, Calicut and Gaya. Landborder stores may follow, he said, subject to the government grantingregulatory approval. Downtown stores and diplomatic stores are fur-ther options – both are being pursued, Piplani added.

THE MOODIE REPORT LANDLORD & CONCESSIONAIRE NEWS


ASUR commercial revenues Q2 2007

Revenue stream Change on year

Duty free shops +32.8% Food & beverage +10.9% Other retail operations +35.4% Parking lots +22.0% Advertising +427.4% Banking & currency exchange services +2.4% Ground transportation +25.8% Car rental companies +33.7% Teleservices +5.3% Others +21.5%Overall +32.7%

Source: ASUR

ASUR commercial revenues H1 2007

Revenue stream Change on year

Duty free shops +28.8% Food & beverage +3.2% Other retail operations +35.8% Parking lots +15.9% Advertising +211.9% Ground transportation +32.8% Car rental companies +40.4% Teleservices –6.1% Banking & currency exchange services –1.0% Others +10.9%Overall +28.3%

Source: ASUR

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ITDC’s long-time monopoly (it beganbusiness in 1967) was broken byFlemingo in 2003 and the trend towardsairport privatisation since at India’smajor gateways has ushered in opportu-nities for other players such as AlphaFuture and The Nuance Group/Shop-pers’ Stop. Can ITDC adapt successful-ly to a new, profoundly competitive era?“Definitely,” Piplani replied. “We havehad setbacks, yes, but we are now facingup to the challenge. Every store we getfrom now on we will make world class,irrespective of size.”

Footnote: The full, fascinating inter-view with NK Piplani, who has beenwith ITDC his whole career acrossvarious divisions since 1971, appears inthe BRIC (Brazil, Russia, India, China)issue of The Moodie Report Print Edi-tion, out in September. It features arange of on-location interviews con-ducted by Martin Moodie in Delhi,Bangalore, Mumbai and Hyderabad,including visits to the greenfield airportsites of Bangalore and Hyderabad. It

will offer the most comprehensive analysis of airport commercial revenues in India ever published.

In related news The Moodie Report has added a new section to our site called The Moodie Report India. Simply usethe drop-down menu on the home page under ‘Regional News’ to access current and archived stories. All stories onIndia since our launch in early 2003 will be added by next week.

INDIA. The new Hyderabad International Airport at Shamshabad is on schedule for opening in March 2008. It isbeing built by GMR Hyderabad International Airport, a public-private joint venture between India’s GMR Group(63%), Malaysia Airports Holdings Bhd (11%), the State Governmentof Andhra Pradesh (13%) and Airports Authority of India (13%).

Last week The Moodie Report visited the new greenfield airport whichis around 76% completed. GMR General Manager, Corporate Commu-nications Shankar Chelluri told us: “We’re on schedule and as per planwe should be operational by March 08 when the first flight takes off.Hyderabad Airport has witnessed upwards of +40% passenger growthin each of the past two years and we see tremendous opportunity.”

The impressively ambitious airport features the longest runway inSouth Asia (4,260m) and includes plans for an ultimate capacity of 40million passengers per annum in its final phase. It includes an extensiveand innovative emphasis on commercial services, including a landsideAirport Village featuring a wide array of shopping facilities and con-sumer services.

The initial phase (1A and 1B) will involve a new 105,300sq m terminalwith the capacity to handle 12 million passengers. Critically, the airportis to be connected to the city by an elevated expressway corridor as wellas other transport facilities.

General Manager Retail & Commercial Keshav Thapa told TheMoodie Report that the final line-up of commercial partners will be

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Selected traffic numbers reported in the past three weeks (continued)

Country Airline/airport May ’07 vs May ’06 (%)

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

Argentina Buenos Aires Ezeiza Airport +9.0 (international)Canada Vancouver International Airport +1.9 (international)Chile Santiago A.M. Benitez Int. Airport +17.9 (international)Czech Republic CSA Czech Airlines +6.0 (total pax)Estonia Tallinn Airport +4.5 (international)Germany Cologne Bonn Airport +5.8 (total pax)Japan ANA +5.2 (international)Maldives Male International Airport +10.0 (international)Thailand Thai Airways International +0.2 (total pax)UAE Dubai International Airport +19.6 (total pax)UK Liverpool John Lennon Airport +16.8 (total pax)UK Manchester International Airport -0.8 (international)US Atlanta Hartsfield-Jackson Int. Airp’t +7.2 (international)US Charlotte-Douglas Int. Airport +3.0 (international)US Denver International Airport +16.8 (international)US Houston Bush Intercont. Airport +5.5 (international)US New York JFK International Airport +10.0 (international)US Newark Liberty International Airport +5.8 (international)US Orlando Sanford Int. Airport -8.6 (international)US San Francisco International Airport +5.1 (international)US Washington Dulles Int. Airport +7.8 (international)



chosen soon. The group has already appointed The Nuance Group/Shoppers’ Stop partnership as its main duty freeand retail partner. But some stand-alone concepts remain to be filled. A number of accessory brands are being consid-ered, both Indian and international, as well as eyewear and watches.

The food & beverage partners are close to being decided. The airport will offer three distinct categories – casual dining(multi-cuisine), coffee areas and bars – across both the international and domestic areas. Leading international food & bev-erage names are in the running, as well as concessionaires such as SSP and HMSHost and a number of Indian companies.

A 400sq m ‘Spirit of Hyderabad’ will be a highlight of the specialist retail offer, featuring the work of local artisans. “Weshould finalise all F&B and news/books formats by the end of this month and other retail next month,” Thapa said. A deci-sion on the airport advertising partner is imminent, with some big international players understood to be in contention.

“We believe non-aeronautical revenues will be around 40% when we start,” said Thapa. “In India it’s usually around25%. Within a five-year time frame we are working towards a 60:40 ratio [in favour of non-aeronautical –Ed].” Heconcluded: “We are all very excited by the development. It will be a landmark in Indian aviation and we will be as goodas any international airport anywhere if we achieve what we set out to do.” For the full story and pictures go towww.TheMoodieReport.com

INDIA. The Moodie Report was part of another extraordinary site visit last week as we joined The Nuance Groupand HMSHost executives and management from Bangalore International Airport Limited to preview the exciting newairport – and travel retail and catering – development.

The much-anticipated new facility is on schedule to commence operations next April. The three-level terminal buildinghas a total area of 71,000sq m, covering both domestic and international operations. The Nuance Group and localpartner Shoppers’ Stop will run most of the retail with HMSHost the key food & beverage provider.

All parties insist that the final offer will reach new heights for an Indian airport. Bangalore International Airport LimitedCEO Albert Brunner told The Moodie Report: “The passenger flow is very clear to the gates and yet you cannot avoidthe commercial temptation.” Commenting on the extraordinary passenger growth of over +40%, coupled with India’sbooming economy and the related surge in travel, he said: “The potential is just staggering.” See The Moodie Blog foran informal and pictorial look at the greenfield development.

INDIA. Passenger numbers at Indira Gandhi International Airport in Delhi, the country’s second-busiest airport,are expected to soar to 82.7 million passengers by 2026, up from 20.4 million last year. International traffic will rocketfrom 5.6 million last year to 25.7 million.

To cope with that growth, the airport must be transformed, Delhi International Airport Limited Chief Operating Offi-cer Andrew Harrison told The Moodie Report. By 2008 Delhi Airport will have a domestic passenger terminal and anew runway capable of handling the A380, and the ageing T2 will be modernised. The ‘Vision 2010’ project will see anew integrated (domestic and international) terminal built in time for the 2010 Commonwealth Games. By that timethe airport will be capable of handling 37 million passengers a year – with an ultimate design capacity of 100 million.

The new terminal will replace the fast-fading T2 and will see a jump in aerobridges from 9 to 55 in two and a half years– “It’s a quantum leap,” said Harrison. Critically retail will be placed beyond security, the reverse of the current situa-tion. “I expect by the middle of next year some of the big commercial operations will go out to tender,” he said. Lastyear Alpha Future was awarded the duty free contract at the existing facility for a period of 3.25 years. By 2021 anothernew domestic and international terminal will be built and a T6 will be added later.

Delhi International Airport Limited is a public–private partnership initiative between GMR Group, Airports Authorityof India, Fraport, Eraman Malaysia and India Development Fund.

RUSSIA. Runway Duty Free and Chanel have teamed up to open a 60sq m ‘pop-up’ style stand-alone store atMoscow Domodedovo Airport. The store, which opened last weekend, features areas dedicated to Chanel’s Précisionskincare range, makeup creations and fragrances.

Runway Duty Free is operated by Aer Rianta International in a partnership with Art Alliance. The company said in astatement: “The concept of this ‘pop-up’ store is unique and innovative, and highlights the Chanel universe in a mod-ern environment. It was also created with the discerning Russian passenger in mind who have become loyal patrons ofRunway Duty Free’s specialised perfume and cosmetics stores, Runway Beauty.”



GERMANY. Long-time incumbent Gebr Heinemann has won a new ten-year retail concession at Hamburg Air-port, which begins when the new SkyWorld Plaza commercial complex opens in late 2008. The Plaza, a 10,000sq mcomplex linking Terminals One and Two, houses 4,450sq m of retail and a further 2,630sq m of food & beverage space.Once Airport Plaza opens the security points in the two terminals will be centralised so all passengers have exposure tothe retail.

Hamburg Airport Head of Retail and Food & Beverage Lutz Deubel told The Moodie Report: “We have agreed a newten-year contract with Gebr Heinemann, although after five years it is possible for us to review the retail concept andstructure of the contract. One of the central features will be a new 900sq m Travel Value and duty free store straightafter security, with a 250sq m premium accessories outlet next to it.”

Other concessionaires apart from Gebr Heinemann include Swiss company Valora for news and books, a SamsoniteBlack Label store and a Soer branded men’s fashion outlet. The Plaza marks the final phase of HAM21, the airportinfrastructure development project, which will be completed in late 2008.

The airport handled 11.9 million passengers in 2006, an increase of +12% on 2005. With +2.5% annual growth projected,the airport expects to handle 15 million passengers by 2015. Of the 18.2 million passengers, meeters and greeters, em-ployees and visitors to the airport in 2006, 35.2% purchased in the retail stores, and 37.3% bought in a F&B outlet.

SINGAPORE. Incumbent Nuance-Watson (Singapore) has successfully defended its Perfumes & Cosmetics con-cession at Singapore Changi Airport. The 38-month contract covers 4,424sq m of space across Terminals One and Two,the Budget Terminal, plus the new T3 which opens on 9 January 2008. This is an increase of 1,459sq m compared tothe existing contract. The result is a triumph for Nuance-Watson (Singapore) Executive General Manager Ken Tse andhis team who have built one of the industry’s most acclaimed beauty operations at Changi.

Tse expressed his delight at being awarded the new concession. He said: “Having been chosen as the perfumes & cos-metics retailer at Singapore Changi for a second concession period confirms that our efforts in providing a truly out-standing shopping experience and at the same time delivering a sound financial performance have paid off. We lookforward to shaping the face of the airport’s shopping offer for the next three years and will continue our efforts to con-stantly improve our already high standards to the benefit of customers at Changi Airport.”

ARI Regional General Manager John Moriarty said: “It shows the interest level and commitment of the [Chanel] brandin Russia as well as understanding the leading position that Domodedovo has, not just among the airports in Moscow,but in Eastern Europe.

“The idea for this store came from seeing Chanel doing a ‘pop-up’ store of 230sq m in downtown Moscow late last year.Once we’d seen it we wanted to do the same in Domodedovo. Thanks to the Chanel team in both Paris and in Moscowwe were able to agree to do the project and have it built and installed within a four-week period. The results so far havebeen very impressive, and the store has proved to be a star attraction at the airport.”

SWITZERLAND. Leading Spanish food & beverage travel retailer Áreas is to sell its 18.2% stake in DufryGroup. Until now the company was the second-largest shareholder in the Swiss travel retailer after Advent Internation-al-backed Travel Retail Investments.

Deutsche Bank is to place its 2.53 million shares shares on the open market, taking the free float of Dufry shares from45.3% to almost 62%. Last month Travel Retail Investments sold a 16.3% share in Dufry.

UK/ITALY. Travel retail-to-catering group Autogrill now owns or has valid acceptances for 96% of the share capi-tal of Alpha Airports Group. The company said this week that it was extending the closing date for its offer of 110pence per share, and will give 14 days notice to Alpha shareholders who have yet to sell their shares.

By 23 July, the close of the initial offer date, Autogrill had received valid acceptances for over 49 million shares, repre-senting 27.9% of the Alpha share capital. Before posting the offer Autogrill had acquired a 65.5% stake in Alpha andhas since acquired a further 2.6% through market purchases.

Autogrill said it would cancel the listing of Alpha Airports Shares from the London Stock Exchange after the purchase.

THE MOODIE REPORT TENDER & CONTRACT NEWS



The Nuance Group President & CEO Roberto Graziani added: “Singapore is one of the key airports in the increasing-ly important Asia Pacific region and one of the biggest single operations within our worldwide portfolio. By retainingthis important contract we further strengthen our position in this region and confirm our position as leading airportoperator on a global basis.

“We operate at both Hong Kong and Singapore airports through our Nuance-Watson joint ventures. This presence enablesus to constantly update our in-depth information on changing trends in customer behaviour in this part of the world.”

Nuance-Watson said the shops would feature “refurbishments driven by passenger segmentation and the evolution ofcategories and merchandise”. The company added: “They will also include two new shop-in-shop concepts designed tooffer even more unique and personalised service. These include Beauty Cabins that offer pampering facial and bodytreatment services to passengers.”

Nuance-Watson was the highest bidder for the contract, ahead of DFS Group, Aelia, Hotel Lotte and Aldeasa. TheChangi business represents one of the biggest duty free opportunities in the beauty sector. For full bid details go towww.TheMoodieReport.com

SOUTH KOREA. The value of the recent tender for various duty free concessions at Incheon International isunderlined by the first year minimum annual guarantees (MAGs) offered by the preferred bidders. The final figures werepublished in local media. Three companies, Shilla Hotel, AK Duty Free and Lotte Duty Free, split the five contracts.

As reported, Shilla was the preferred bidder for the major fragrances/cosmetics and fashion/miscellaneous spaces; Lottegained liquor & tobacco exclusively and the second fashion/miscellaneous area and AK Duty Free is set to operate thesecond fragrances & cosmetics contract. The Moodie Report understands that the winning bidders are now in finalnegotiations with the airport authority about their business plans. Contracts will be signed by mid August.

The first-year MAGs are: Duty free one (fragrances & cosmetics), Shilla Hotel: KRW98 billion (US$106.7 million at current exchange rates)Duty free two (fragrances & cosmetics), AK Duty Free: KRW87 billion (US$94.8 million) Duty free three (liquor & tobacco), Lotte Duty Free: KRW120 billion (US$130.7 million) Duty free four (fashion/miscellaneous), Lotte Duty Free: KRW81 billion (US$88.2 million) Duty free five (fashion/miscellaneous), Shilla Hotel: KRW50 billion (US$54.5 million)

It is understood that Lotte and DFS actually bid higher than Shilla for the major fragrances & cosmetics concession. Asthe figures reveal, Lotte also came in higher on the fashion/miscellaneous bid but Shilla gained the greater share of thespoils. For the full story go to www.TheMoodieReport.com

SOUTH KOREA. Hotel Lotte has been awarded a six-year duty free concession at Gimhae International Airportin Busan after an open tender called by Korea Airport Corporation. The incumbent retailer is state-owned KoreaTourism Organization (KTO), which was Lotte’s nearest competitor in financial terms. Other bidders were ParadiseDuty Free, Shilla Hotel and AK Duty Free.

The news is a major boost for Lotte, the country’s most powerful duty free retailer, after its recent disappointments inSingapore Changi Airport (where it bid highest on liquor & tobacco but lost out to incumbent DFS) and IncheonInternational Airport (where it missed its key fragrances & cosmetics target, again despite a higher bid).

Hotel Lotte Duty Free Director YS Choi told The Moodie Report: “There will be a lot of new space created throughexpansion. We estimate that sales will be more than doubled.” He said the company was delighted with the result.Gimhae handles around 9.2 million passengers a year. Busan is the largest port city in South Korea and, with a popula-tion of about 3.65 million, is the country’s second-largest metropolis.

SPAIN. Airport authority Aena (Aeropuertos Españoles y Navegatión Aérea) has extended Aldeasa’s travel retail andduty free concessions at 14 Spanish airports until 31 December 2009. The concessions had expired on 31 December 2006.

Aldeasa, a 50:50 joint venture between Autogrill and Altadis, operates in Alicante, Almería, Barcelona, Bilbao, Girona,Ibiza, Jerez de la Frontiera, Málaga, Menoría, Palma de Mallorca, Reus, Santiago de Compostela, Sevilla and Valenciaairports. Aldeasa also has a separate contract at Madrid Barajas which lasts until 2012. In 2006 the retailer posted rev-enues of €723.6 million, up +11.9% on €646.8 million in 2005, thus contributing €361.8 million to consolidatedGroup revenues – an increase of +52.9% on the previous year.



FOOD & BEVERAGE AND OTHER COMMERCIAL REVENUESTHE MOODIE REPORT

IRELAND. Alpha Retail has launched a new restaurant concept at Dublin International Airport, The Eating Place,which focuses on locally sourced food and national dishes. It is anticipated that the self-serve restaurant, located land-side, will attract more than 20,000 customers per week. Alpha Retail’s 12-year contract to operate The Eating Placebuilds on its existing relationship with Dublin Airport, where it already operates an airside food hall.

The Eating Place covers 460sq m and has room for 184 customers. Seating has been configured specifically with trav-eller profiles in mind, said Alpha, including single seats for lone travellers.

Commenting on the opening, Alpha Retail Catering Controller Bev Holland said: “Our aim with The Eating Place wasto make food the hero, sourcing produce locally where possible and providing fresh food options that travellers want toenjoy. This, combined with the exceptional standards that Alpha is known for worldwide, makes a strong proposition.The Eating Place ethos will work well at any airport and will become a key part of Alpha’s retail catering portfolio.”

Dublin Airport General Manager Retail and Catering Service Bill Twomey commented: “Unprecedented growth inpassenger numbers has increased the requirement for a strong food & beverage offering at Dublin Airport. The EatingPlace is an exciting addition and I have no doubt its commitment to using fresh Irish produce and developing a con-temporary food offer in tune with our passengers’ changing tastes will prove popular.”

SINGAPORE. Nuance-Watson (Singapore) and SSP Singapore are the leading bidders for a Western bar & grillconcession at Singapore Changi Airport Terminal Two, Departure/Transit Lounge North. The tender attracted threebids, the other being from Palms Food International.

SSP’s higher percentage of sales offer – 26%, against Nuance-Watson’s 13% – could swing the concession its way, but ifthe airport authority chooses the higher guaranteed minimum, then Nuance-Watson’s bid looks a strong candidate.

Nuance-Watson (Singapore) offered either 13% of the total monthly gross sales OR a Minimum Monthly Guaranteedpayment for: Year 1 of the concession S$30,000, Year 2 of the concession S$35,000, Year 3 of the concession S$35,000;whichever is higher.SSP Singapore offered 26% of total monthly gross sales for total monthly gross sales up to S$142,000 per month; plus35% of incremental monthly gross sales for total monthly gross sales above S$142,000 per month; OR a MinimumMonthly Guaranteed payment of S$26,000; whichever is higher.Palms Food International offered 20% of the total monthly gross sales OR a Minimum Monthly Guaranteed pay-ment of S$13,800, whichever is higher.

The contract begins on 8 October and runs for three years. There is no option for renewal.

THE MOODIE REPORT AIRPORT DEVELOPMENT NEWS

CHINA/SINGAPORE. Changi Airports International (CAI) has formed a strategic joint venture with Shen-zhen Airport Group to invest in and manage up to 50 regional airports in China. CAI will hold a 49% stake in the jointventure and Shenzhen Airport Group, owner of Shenzhen Airport, will own the rest. The joint venture said it willtarget airports handling 3–5 million passengers a year.

CAI said the alliance would give it a vehicle to access China’s booming aviation market. CEO Chow Kok Fong saidChinese passenger traffic reached 320 million in 2006, and would increase by between +15 and +20% a year in the nextten years. CAI already has a 29% stake in Nanjing Lukou International Airport and has airport consultancy projectswith China’s Chengdu and Qingdao airports. In an interview with The Moodie Report in May, Chow Kok Fong saidthat the Changi Airport concessions model would be the retail model favoured by CAI in future overseas investments.



SINGAPORE. The Moodie Report is opening an Asia Pacific office next month, based in Singapore, as part ofour continuing expansion and desire to add value to our services, both in the region and internationally. Two keyappointments have been made. Justin Lee has been named Research & Analysis Manager and Melody Ng becomesAsia Pacific Reporter. Justin is fluent in written and spoken Mandarin and Japanese and Melody in Mandarin. Both aregraduates of the National University of Singapore.

The Moodie Report Publisher Martin Moodie said: “The opening of The Moodie Report Asia Pacific division is acritical step forward in our ambitions. Since our launch in September 2002 we have sought constantly to innovate andcontinually re-invest in our services to the industry and the strength of our people. This development will increase ourimmediacy and further bolster our determination to be an around-the-clock business information provider. We areanxious to be a truly global company, both in terms of locations and the nationalities and language skills of our team.”

“Justin’s appointment is also a major advance for us. He will drive our new Research, Analysis & Consultancy divisionin the travel retail heartland of Asia and also take charge of our newly acquired airport commercial revenues bench-marking service, The Airport Retail Study. We are poised to launch a number of innovative new research projects thatwe think will create real interest in the market.

“Justin’s efforts in business research will be complemented by our new consumer research strategic alliance in the UKwith UK research & category development specialist Counter Intelligence Retail, which has already got off to a flyingstart. The Moodie Report’s Research, Analysis & Consultancy Division will now be able to provide a full suite of busi-ness and consumer research related services on a customised, confidential basis as well as ‘off-the-peg’ projects that willbe made available to the market as a whole.

“Melody Ng is a bright and ambitious young reporter of great integrity, who will represent us with distinction in theregion. In both language and reporting skills she will complement the efforts of Asia Editor Hui Min Neo, who is cur-rently seconded to Zürich by Singaporean national newspaper The Straits Times. Both appointments are effective from 6August. From that date Justin Lee can be contacted by e-mail at [email protected] and Melody Ng [email protected]

FEEDBACK – TRADETHE MOODIE REPORT

Dear Martin

Thank you for your letter of 19th June and enclosed cheque for £2,902 [10% of sales from The World Rovers, the story of the Irishin duty free –Ed] in support of the concept Mankind Must Manage World Without War (MMMWWW). I am particularlygrateful to you for your encouragement of my work.

My colleagues at the Irish Peace Institute continue to promote peace building and reconciliation here in Ireland and also abroadthrough MMMWWW. To have witnessed in my own lifetime an end to the centuries of hostility and bloodshed between Irelandand England is highly rewarding and motivates me to continue working for peace. There is a pressing need to promote the interna-tional dimension of MMMWWW and your most generous contribution will assist with this work.

I greatly admire the role played by you and Colm McLoughlin in promoting through The World Rovers the message of peacethroughout the duty free industry, and by you in The Moodie Report.

Kind regards and all good wishes,

Brendan O’Regan [the founder of the airport duty free industry, in Shannon, Ireland in 1947 –Ed]

THE MOODIE REPORT GENERAL NEWS



PEOPLE NEWS, JOBS, EVENTS & NOTICESTHE MOODIE REPORT

FRANCE. Philippe Goldman has been appointed Lancôme Division Manager for Travel Retail Europe, MiddleEast and Africa. He replaces Jean-Guillaume Pollet who, after seven years, is joining L’Oréal Middle East in Dubai asPrestige & Collections Division Manager for Middle East domestic markets (handling fragrances in addition to Bio-therm and Helena Rubinstein). Previously Goldman was Lancôme Area Manager for France, Spain and Portugal withinthe Travel Retail Europe, Middle East & Africa region.

HONG KONG. The Regal Airport Hotel, close to Hong Kong International Airport, has been chosen as the venuefor the big travel retail industry fund-raising charity dinner ‘Turning Tears into Smiles’ on 5 October. All proceeds fromthe event, co-organised by The Moodie Report and Hugo Boss, are being donated to The Smile Train, the world’s lead-ing cleft surgery programme. It specialises in funding surgeries in developing markets, especially for children.

The Regal Airport Hotel is offering highly preferential rates for the many dinner guests flying into Hong Kong for theoccasion. Underlining the hotel’s support and that of Airport Authority Hong Kong for the fund-raiser, the Regal isoffering Superior Rooms for just HK$990.00 per room per night (the tariff rate is HK$3,000.00). The rate is subject to10% service charge and 3% government tax and one American buffet breakfast is included. To take advantage of thepreferential rates please go to TheMoodieReport.com to download the reservation form.

“The Regal has also offered a number of significant discounts to the organisers to help minimise our costs and max-imise proceeds to The Smile Train, so we hope that visitors to Hong Kong will support the hotel and create a realsense of industry camaraderie at the venue,” said The Moodie Report Publisher Martin Moodie.

Industry support is continuing to flow in for the dinner; some 210 guests are now booked with many more expected. Ina big boost for the event, Dubai Duty Free Managing Director Colm McLoughlin and his wife Breeda, always greatsupporters of industry causes, today confirmed their attendance. Separately, cash donations of over US$65,000 havecome in or been pledged, with many more in the pipeline. The latestcompany to book a table is wines & spirits distributor Maxxium.

“Having seen the magnificent work of The Smile Train first-hand inHyderabad last week, I am even more determined that we drive thiscritical fund-raiser to new heights,” said Martin Moodie. “Please bookyour seats or tables, or help us out with cash donations at any level.Every dollar counts to The Smile Train. We also urgently need highvalue, innovative and selective items for the silent and live auctions onthe night.”

Last year The Smile Train offered free cleft surgery to 42,000 childrenin over 60 countries, particularly developing markets. It costs justUS$250 and takes only 45 minutes to change a child’s life – and that oftheir families – forever.

How can you help? By booking seats or full tables at the 5 Octobercharity dinner (HK$2,000 a seat or HK$20,000 a table) or by pledgingdonations by e-mail to Martin Moodie [email protected] or to Nadine Heubel [email protected]

Pledges can be made at all levels to suit company and individual budgets.For more information please visit www.smiletrain.org

To The Moodie Report,

Thanks for showcasing a great airport concession program from what we can see in your publication [last week’s The Moodie ReportPLUS report on Paris Charles de Gaulle Airport].

We are all looking for new “wow” concepts and how to jazz up our concessions and sales.

Patricia Ryan, Miami Airport

OUT NOWOUT NOW



AUSTRALIA. Two of The Nuance Group Australia’s longest-serving and most respected executives have left thecompany to pursue other opportunities. Mel Kearney was Regional Category Manager (Liquor/Tobacco/Wine/PackagedFood/Souvenirs), and Sophie Kalofonos was Regional Category Manager (Fragrance/Cosmetics/Fashion/Concepts).Nuance declined to comment further.

MACAU. Martha Rosas, the long-time Duty Free Manager Worldwide of Luxottica Group, has taken up a newrole with Duty Free Americas Macau. Rosas, one of the most highly-rated executives in travel retail – and a star turn atlast year’s ACI Airport Business & Trinity Forum in Dubai – left Luxottica to assume the new post earlier this monthafter seven years’ distinguished service. She has been named Director Purchasing & Merchandising Asia for the ambi-tious retail group, owned by the Falic family. Duty Free Americas announced its first Asian operation in February afterthe signing of a contract to operate 16,359sq ft of retail space at The Venetian Macao Resort-Hotel complex.

UK. Alpha Airports Group has named Karen Broughton as Group Marketing Director, a new position at the company,effective from 17 September. Her responsibilities will include Alpha’s brand and marketing strategy, communications,market research and proposition development and all digital activities across the Flight Services and Retail businesses.She has previously held senior marketing roles at British Airways and BAA.

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

Martin Moodie, Editor and Publisher

THE MOODIE REPORT LATE NEWS

INTERNATIONAL. LVMH Moët Hennessy-Louis Vuitton's Selective Retailing division, which includes DFSGroup and the group’s other travel retail interests, posted organic growth of +10% (+5% reported) in first-half rev-enues to €1,891 million. LVMH said in a statement: “DFS benefited from the purchasing power of its Chinese clien-tele, which is similar to that of other Asian customers. Despite the weak Yen, which has restricted the spending ofJapanese travellers, DFS maintained rigorous operational management to ensure solid profitability.” Profit from thedivision’s recurring operations increased to €151 million despite the unfavourable currency impact of the Yen againstthe US Dollar and other currencies such as the Korean Won.

LVMH, the world’s leading luxury products group, recorded revenue of €7.4 billion in the first half of 2007, represent-ing organic growth of +12% (+6% reported). All business groups enjoyed double-digit organic revenue growth. LVMHsaid its performance was particularly good in Europe, the US and Asia. It noted: “Profit from recurring operationsincreased by +11% to €1,440 million. This performance was achieved in a difficult currency environment and is evenmore noteworthy given the strong growth in the first half of 2006.”

LVMH Chairman and CEO Bernard Arnault commented: “Our performance during the first half of the year onceagain demonstrates the exceptional appeal of our brands as well as the coherence and effectiveness of our strategy. TheGroup recorded a further increase in its current operating margin to more than 19%. These results are even moreremarkable given the significant negative impact of exchange rates in the first half of 2007. Numerous product launch-es, geographic expansion in targeted, high potential markets and growing success with new clients should allow LVMHto continue its progress in the second half of the year in a favourable economic environment.”

LVMH revenue and profit by business group, H1 2007 vs H1 2006

Business Revenue Revenue Change Change Profit Profit Changegroup H1 2007 H1 2006 (reported) (organic*) H1 2007 H1 2006

Wines & Spirits 1,314 1,220 +8% +13% 393 355 +11%Fashion & Leather Goods 2,601 2,466 +6% +12% 814 742 +10%Perfumes & Cosmetics 1,264 1,169 +8% +12% 108 79 +37%Watches & Jewelry 390 333 +17% +23% 57 30 +90%Selective Retailing 1,891 1,798 +5% +10% 151 147 +3%Other activities & eliminations –48 –18 — — –83 –58 —Total 7,412 6,968 +6% +12% 1,440 1,295 +11%

All figures are in millions of Euros*On a constant structural and exchange rate basis Source: LVMH

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THURSDAY 26 JULY 2007 WELCOME FAST, … 26 JULY 2007 FAST, FACTUAL, FREE ... the gateway to India’s ... The same tagline has been given to APTRA’s forth-