next hottest shopping destination may not be its swanky malls, but its
airports, which are getting a rapid makeover into 21st century jet-setter
As the airports located in Mumbai, Delhi, Bangalore and
Hyderabad get modernized, they are leveraging their huge swathes of
renovated interiors to earn extra revenue. In the process, they are
bringing to India a new brand of retailers and hoteliers: the airport
In mature markets, the revenuesfrom an airport
point of vieware coming more and more from commercial activity.
Commercial activities such as office space, car parking, food and beverages
and retail represent 60% of the total turnover of the airport,
said Roberto Graziani, president and CEO of the Swiss-based Nuance Group,
one of the top airport retailers in the world. Graziani spoke to Mint
during his recent visit to India.
Last year, The Nuance Group AG and its local joint-venture partner,
Shoppers Stop Ltd, won from Bangalore International Airport Ltd
(BIAL) the rights to operate duty-free retail at Indias fourth-biggest
airport for five years. Shoppers Stop also bagged the mandate
to handle retail in the domestic part of the Bangalore airport supported
Another reason why airports the world over are looking at other options
of raising money are the spiralling aviation fuel prices and the resultant
pressure from airlines to reduce landing fees. Airports have to
find a way to finance the huge investments for terminal development
and renovation, Graziani said.
Typically, non-aeronautical revenue accounts for about 40% of the total
revenue of an airport located in any of the four metros of Delhi, Mumbai,
Chennai and Kolkata. With real-estate prices touching new highs in these
cities, growing nearly 30% in a year, airports offer a viable option
for real-estate and retail players. Duty free is the biggest potential
revenue generator for retailers and airport operators, said Meghna
Goenka, general manager, retail services, at property consultants Trammell
Crow Meghraj Pvt. Ltd.
At the airports in Delhi and Mumbai, it is the upgrade and the additional
space being created that is opening up value. The GMR Group, which is
modernizing Indias second-busiest airport in Delhi, the Indira
Gandhi International (IGI) airport, has appointed Jones Lang LaSalle
to prepare a strategic plan for monetizing 250 acres of land. Of this,
50 acres will be bid out to global real-estate developers in the next
few weeks to raise Rs3,000 crore to part-fund the project cost of Rs8,600
crore, says Madhu Terdal, chief financial officer, corporate strategic
finance, GMR Group. The remaining land will be put to commercial use
later for passenger or airport operation related activities.
BIAL and the Hyderabad international airport are relying on commercial
activities to raise additional resources. Worldwide, airports such as
London Heathrow host a range of products for retail, both inside and
outside their departure loungesfrom grocery chains run by Marks
& Spencer Plc. for everyday food and snacks, to an upmarket
Giorgio Armani cosmetics counter.
Hotel chains, rushing in to address an estimated 1,50,000 room shortage
in India, are also queueing up at airports. BIAL, which is promoted
by a consortium comprising Siemens Projects Ventures, Larsen &
Toubro Ltd, Unique Development Corp. and the Airports Authority of India,
has selected the Oberoi Group and Larsen & Toubro to build and
operate a first-class international hotel under the Trident Hilton brand
within walking distance of the terminal building. The hotel will cost
about Rs250 crore and offer 321 plush rooms, large conference facilities,
restaurants and a world-class spa. If the project meets its deadline,
the hotel will be in place by November next year.
The GMR Group has a land bank of about 700 acres at the Hyderabad airport,
too, and it plans to monetize this in the next few years. A consortium
led by GMR has tied up with Singapores Accor Hotels and Resorts
to operate its first business hotel here. The hotel, which will start
operations after March 2008, will come up on a five-acre site about
three km from the passenger terminal. According to GMR Hyderabad International
Airport Ltd (GHIAL) chief operating officer T. Srinagesh, the hotel
is being developed in line with practices followed by all leading airports
in the world.
The competition between Hyderabad and Bangalore to become Indias
next centre for outsourcing and technology companies is adding fuel
to the race to develop airport properties. The GHIAL-led consortium
plans more commercial real-estate development, including convention
centres, business hotels, business park, industrial estate, free-trade
zone, shopping malls and entertainment complexes.
Nuance and Shoppers Stop have won a seven-year deal to operate
retail at Hyderabad International Airport, too. They expect to earn
revenue of up to $240 million (Rs984 crore) over the seven years. The
contract will commence in March 2008, when the airport is to open.
BIAL also plans to have commercial activity for large offices and other
related real-estate spaces. In future, the airport city will have more
hotels, along with retail, serviced apartments, office park, software
campuses and a lot of free public spaces, a BIAL spokesperson said.
BIAL will be looking for two mono-brand outlet operators each in the
domestic and international departure areas, along with retail outlets
on the curbside. It will develop a mall, which will offer merchandise
and food courts and be an alternative destination for those who prefer
a lively experience.
As airports grow, they are sitting on acres of land that
will allow for the building of modern spaces, said B.S. Nagesh, managing
director, Shoppers Stop, a listed entity promoted by the K. Raheja
Group. Today, there are no malls, there is no good environment
to do the kind of single-brand retail that is permitted by the government,
he said.Shoppers Stops two contracts, estimated to be worth
$150 million, cover retail space of approximately 3,400 square metres.
Mumbai International Airport Ltd (MIAL) recently awarded the duty-free
retail contract for the Chhatrapati Shivaji International Airport to
a joint venture between Madrid-based airport duty-free retailer Aldeasa
and the duty-free unit of state-owned ITDC. During the three-year
contract, MIAL expects to garner revenues of Rs571 crore, said
Manish Kalghatgi, general manager, MIAL, which is a joint venture between
GVK Group, Airports Company South Africa, Bidvest and the Airports Authority
The GMR Infrastructure-led consortium, which was given the mandate to
modernize the IGI airport in Delhi, has awarded a three-year, Rs500
crore duty-free shopping contract to the Alpha-Pantaloon consortium,
comprising UK-based Alpha Airports Group Plc. and Pantaloon Retail (India)
Ltd of the Future Group.
The new Alpha-Pantaloon duty-free shops will run one outlet in arrivals
and four in departures, covering an area, in total, of about 8,000sq.