MIDDLE EAST DUTY FREE ASSOCIATION OFFICIAL GUIDE 2005 Published by
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December 2005 MEDFA OFFICIAL GUIDE 2005 From the Editor FROM THE EDITOR Welcome to the Official Guide of the fourth annual Middle East Duty Free Association (MEDFA) conference. As always MEDFA has attracted a sell-out audience, confirming its status as the industry s most successful regional conference. One doesn t have to search very hard to understand why. The Middle East may be among the world s most volatile regions politically, but its travel retail channel has offered a remarkably consistent and consistently remarkable trading environment over the past 20 years. Growth has almost become a given in this part of the world, underpinned by tremendous passenger traffic increases, at times frenetic airport development and profound advances in the airline sector. The articles within this special edition consistently touch on those big picture issues, the drivers of the optimism that colour travel retail thinking in this region. But sound fundamentals still have to be exploited, and there is no sector of our industry that does that better than the Middle East. The region s leading travel retailers have justifiably become part of industry legend what executive does not know about Dubai Duty Free, Abu Dhabi Duty Free and Bahrain Duty Free? Many others, profiled in this edition, are following suit. The Middle East is the channel s torch bearer for investment, imagination and innovation. The region s airports, in particular, have long been ahead of their time in putting commercial revenues at the heart of everything they do and doing it with panache. That reputation and its resultant healthy intra-regional rivalry means there is no place to hide. Retailers monitor each other continuously, all as willing to learn from rivals as they are keen to stay ahead of them. At The Moodie Report we cover the global travel retail channel seven days a week, 365 days a year. No region keeps us up to the mark better than the Middle East. In this issue we look back on the big stories that have dominated the headlines in the 12 months since the last MEDFA conference while we also look forward to some of the extraordinary advances to come. The Moodie Report believes there are six predominant themes that will colour the industry s regional development over the coming years. They are: Political stability and peace: The tragic assassination of former Lebanese Prime Minister Rafik Hariri in February; the terrorist attacks in Egypt, Qatar and Jordan; the political calamity in Iraq; and the still unresolved pursuit of an independent Palestinian state all these blight not only the region s social and political environment but also its commercial one. Commentators need to be wary about trotting out the old clichés about industry resilience for, as Aer Rianta International Middle East Managing Director John Sutcliffe points out (page 63), instability and terrorism undermine the very foundations of our business. Airport privatisation: This is a dynamic sweeping the world s airport sector and the Middle East will not remain untouched. Already Abu Dhabi International has come under the privatisation spotlight and in recent days so has Amman Queen Alia International. MEDFA President Colm McLoughlin has probably got it right (page 9) in saying that governments here are more reluctant to hand over their jewels than elsewhere in the world. But given the sheer enormity of some of the airport investments taking place, private influence is set to grow in some countries at least. Airport investment: An impressive, sometimes incredible, level of investment is being poured into the airport sector. Given this region s commercial heritage, there is no way that retail won t be at the very heart of the action as a service to travellers and as a funder of infrastructure development. Airline growth and diversification: At The Moodie Report we always say Watch the parent industry i.e. the travel sector. The Middle East has now become synonymous with airlines that have challenged conventional wisdom and won Qatar Airways, Emirates, Etihad, Air Arabia. Such airlines are bringing new aircraft, new routes and new passengers. Duty free will be a direct beneficiary for many years to come. The tender trap: The blood may have only been metaphorical during the scrap for the Kuwait International duty free contract, but it wasn t far from being the real thing. As Aldeasa s Pedro Castro points out, (page 47) an open tender is a rare beast in this part of the world and needs to be hunted down. But limited prey usually spells a higher bounty and the examples of Jordan, Oman and Kuwait in recent times show that this region is just as prone to aggressive contract bids as anywhere else. Are they excessive? Invariably the winners and the losers vary sharply on that point. Most of the high-profile Middle East duty free locations involve longterm concessions, joint ventures or airport-owned retail; that will only put more pressure on the tenders that do occur. Retail differentiation: Regional retailers have been slow to embrace national flavours in the past, but they are making up fast for lost time. Watch the understated but hugely successful move into private label by Dubai Duty Free (called Akaru); look out for a big push in this direction from Abu Dhabi Duty Free; witness the intense focus on exclusives by Qatar Airways; and see how Bahrain and Beirut s focus on A Sense of Place is spreading through the region. Sameness has become anathema to the new generation of travel retailers and the retail offer will be the better for it. Martin Moodie, Editor and Publisher The Moodie Report 5
December 2005 MEDFA OFFICIAL GUIDE 2005 Contents 13 40 47 26 30 50 65 5 From the Editor: Martin Moodie has been commentating on the business for nearly 20 years and says nowhere can compete with the Middle East s investment and innovation-driven approach 9 The Presidential view: MEDFA President Colm McLoughlin is upbeat about the region s duty free prospects 13 A compelling year in Middle East duty free: A summarised chronology of industry events of the past 12 months as documented by The Moodie Report.com s unique online coverage 26 Dufry Emirates: Ambitious retail developments are under way at Sharjah International Airport 30 Aldeasa Jordan: No surrender to terrorism as Aldeasa posts fine trading results at its Amman flagship store 33 Muscat Duty Free: Set for expansion in 2006 34 Saudi Arabian Airways: Skysales makes plans for a duty free future as airport shops bring new competition 37 Dubai Duty Free: A non-stop success story reaches new heights 40 Hamila Duty Free: Seizing regional opportunities 42 Qatar Airways: A five-star airline with a five-star approach to duty free. Meet the amazing Akbar Al Baker 45 Traveller: Inflight specialist buoyed by Kuwait Airways gain 47 Aldeasa moves into Kuwait: It was the most contentious tender in Middle Eastern history but Aldeasa insists its bid was valid. The retailer speaks for the first time about its offer and its plans 48 OAG rankings: Middle East airports ranked by international flight frequencies by the world s leading airline analyst 50 Abu Dhabi Duty Free: A remarkable tale of transformation 55 Middle East Exclusive: Gearing up for a great show 56 Aer Rianta International Middle East: John Sutcliffe tells it straight, the only way he knows 65 Emirates: Amazing growth and this is only the beginning 66 MEDFA Who s Who: Details of MEDFA members Editor Martin Moodie Production Editor Jon Elphick Designer Ray Heath Contributors Hui Min Neo; Peter Marshall Commercial Director Mandy Shine Advertising Development Director Claire Wates Published by The Moodie Report on behalf of MEDFA www.medfa.ae www.themoodiereport.com; e-mail: Martin@TheMoodieReport.com The Moodie Report 7