Few takers for duty-free retail space in non-metros

New Delhi: India may have to wait longer to catch up with the rest of the world in airport retail, judging from the response to last month’s call for bids to run duty-free concessions at six small international airports.
Four out of the six have received no response, according to the Airports Authority of India, or AAI. That reflects retailers’ scepticism about their revenue earning potential amid an economic downturn and impatience over bureaucratic red tape.
There were no takers for duty-free retail space at Jaipur, Lucknow, Amritsar and Thiruvananthapuram. Coimbatore airport received two bids—from Dubai-based airport retailer Flemingo International Ltd and state-owned India Tourism Development Corp., or ITDC— and Pune airport got one from Flemingo.
The poor response—the results of the bidding were declared in the second week of January—was a setback to efforts to promote airport retail and upgrade existing airports. Passenger traffic is declining as the US and Europe struggle with recession and Indian economic growth slows.
Airport retail had been seen as a potentially attractive opportunity in India. In a September study, real estate consultant Cushman and Wakefield said about 78 million sq. ft of retail, commercial and hospitality space would come up by 2015 with 40 airports being upgraded and seven new ones built.
Globally, non-aeronautical revenue comprises 70% of airport revenue. In India, the proportion was 35% in 2007. The study by Cushman and Wakefield said that by 2015, the share of non-aeronautical revenues would likely grow to 54%. And by then, retailing would constitute a healthy 27% of non-aeronautical revenues, it said.
But such projections have failed to enthuse retailers.
22/01/09 Rasul Bailay/Livemint

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Categories: Airports Jan 2009