Duty Free Tender
Spain’s duty free mega tender (II)
What happens next?
Soon the action will really heat up as AENA unveils the bidding timeline; confirms the final number and nature of the lots (and perhaps any limitation on how many lots one retailer can win); plus the contract duration.
The pandemic’s brutal impact on the business through 2020 and 2021 and the resultant well-documented souring of relationships between AENA and Dufry make this a particularly intriguing and very open tender. In late 2021, AENA declined to extend any contracts (including Dufry’s) affected by a new law that changed the basis on which concession fees are calculated at its airports.
The law stated that the Minimum Annual Guaranteed fees (MAG) payable at Spanish airports would not be owed for the pandemic-hit period between 15 March and 20 June 2020. In addition, they were proportionally reduced from 21 June 2020 onwards by comparing the lower volume of passengers at the Spanish airports to 2019 passenger levels.
This formula, under the current contracts, stays in place until passenger numbers return to those that match 2019. Little surprise then that AENA declined to renew any contract that bound it to reduced rent.
AENA is fully aware of the commercial trauma that each of its prospective bidders has been through because of the pandemic. So its task in selling the opportunity to still bruised and battered candidates is far more difficult than it would have been. But a combination of the clever packaging of a greater number of lots; the revamped weighting of financial and technical criteria; the Brexit factor (a big positive compared with the last tender); the likely ten-year or more contract duration; the heavy investment in airport infrastructure; the digital opportunity; and, critically, the fast-improving travel sector, will have raised AENA’s confidence that it can attract multiple attractive bids.
There is also the very real possibility of ‘dark horse’ bids from Asia and elsewhere to add spice to the contest. The Moodie Davitt Report is aware of several players outside the most obvious candidates that have expressed a desire to secure some of the prize.
Make no mistake, there will be no shortage of bids nor any lack of quality. But what about the money? The sizing up of risk versus opportunity has been an integral element of airport tenders as long as they have existed. The pandemic may have engendered a much greater caution among most travel retailers but as Cuenda well noted, the Spanish tender is hardly an everyday opportunity. The scene is set. The race about to begin.
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