Mumbai: The firm operating the Mumbai International Airport Ltd (Mial) project terminated a previously awarded contract for duty-free retail to the joint venture (JV) floated by Spain’s Aldeasa and state-run India Tourism Development Corp. Ltd (ITDC), after they sought a renegotiation and instead gave it to rival bidder—the Hong Kong-based luxury retailing firm DFS Group Ltd—for a lower fee of Rs260 crore.
The three-year contract Mial initially awarded ITDC-Aldeasa guaranteed a revenue of Rs571 crore to the airport developer, which was being reworked last week. At the time of the original bidding, DFS was the second highest bidder.
“We do not want to renegotiate for a lower value with them (ITDC-Aldeasa),” said a Mial spokesperson, who did not want to be named. “On top (of the Rs260 crore), DFS Group would be giving a certain percentage as revenue sharing, which I can’t disclose due to confidentiality,” he added. He said although there’s an in-built penalty clause for bidders who did not execute the project, Mial has not initiated any such action.
Mial is a JV between the GVK Group-led consortium (74%) and Airports Authority of India (26%). Aldeasa-ITDC, which was supposed to start operating?the?new duty-free area from 1 June, was chosen from among?five?short?listed?bidders.
ITDC chairman and managing director Pervez Dewan said “we will come out with a joint statement tomorrow.” Aldeasa India’s general manager Teresa De Bedmar declined to comment. Executives at the DFS Group couldn’t immediately be reached for comment.
DFS Group is one of the world’s leading luxury retailers and operates more than 150 shops at major airports in the Asia-Pacific region and North America. ITDC’s duty-free division operates at 10 airports in India. Last year, a 50:50 JV of India’s largest retailer Future Group and Alpha Airports Group Plc. won the bid for operating duty-free stores at New Delhi’s international airport for Rs500 crore for three years. The duty-free shopping area at Mumbai airport will be spread across 24,541 sq. ft.
Still, an average passenger spends less than $3 (Rs119) per person at Indian airports, compared with the global average of $15 per person, making it a tougher business at present. However, this sales figure is expected to go up in coming years as duty-free shopping catches up in the country’s modernized airports.
Rasul Bailay contributed to this story.