Indian tenders deemed "complex and expensive"

Gavin Lipsith

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One of the country's largest operators insists the company will bid at some of the nine airport locations offered, but says several factors could make business difficult for the winners

Two retailers told DFNI Asia that the rental demands have risen since the last round of tenders published by AAI, which were widely criticised by potential bidders as being too onerous. Companies also claimed that at six of the airports there are several irregularities that could make business complex. The ongoing privatization process at Indian airports is a key problem, said one.

"Hyderabad and Bangalore airports are included in the list of tenders, but they will be replaced by the new private airports which open in 2008," he said. "It will probably be 10 months before an operator can open stores at those airports, which leaves very little time to operate at the airports."

Similar problems may occur at Kolkata and Chennai, where the government is already planning to launch airport privatisations. At Goa and Gaya airports there are different problems: Goa is a seasonal airport which only welcomes traffic for five months of the year, while at Gaya there is just one weekly flight, carrying Buddhists on a pilgrimage to the spot where the founder of Buddhism first reached enlightenment.

Despite the problems there is expected to be strong interest from all three operators in India: India Tourism Development Corp, Alpha Asia and Flemingo International, as well as international retailers. Flemingo joint managing director Rasik Thakker confirmed his company's interest and said it could be easier for a company already operating in India to make the contracts pay.

"We will definitely bid in some of the contracts," he said, "although it will be difficult for companies from abroad this time round because of the privatization and expensive contracts. We already operate at some airports, so we already have stock and could probably open a store within 30 days."