Nuance in lead at Wellington, sources claim

Results of survey
A	35.9 %
B	6.4 %
C	28.2 %
D	10.3 %
E	9.0 %
F	10.3 %

Home

Gavin Lipsith

8-Feb-2006

Print Article

E-Mail Article

E-Mail Author

Reliable sources have suggested to DFNI Asia that The Nuance Group has been nominated as preferred bidder at Wellington airport, subject to the result of an outstanding legal dispute with incumbent Duty Free Stores New Zealand

Wellington International airport has nominated The Nuance Group as preferred bidder in its duty-free tender, several sources involved in the process have claimed. Rival bidders have been notified of the decision and Nuance—via its New Zealand subsidiary Regency Duty Free—has been made aware that its status is subject to the airport resolving its outstanding legal dispute with incumbent operator Duty Free Stores New Zealand.

Duty Free Stores launched an injunction against Wellington to prevent the landlord from continuing the process late last year (RavenFox.com December 12 2005), claiming that the tender terms would damage its business if another operator were appointed. If Duty Free Stores does not win the tender it will be forced to compete with the appointed operator for the remaining two years of its contract, with the two retailers' stores competing directly for footfall.

However, sources close to the process told DFNI Asia that Duty Free Stores' complaints against the airport were "unfounded". One observer insisted that the airport had originally tried to renegotiate a longer contract with the retailer, but was forced to go to tender when Duty Free Stores refused to offer a realistic rent.

Duty Free Stores marketing and operations director Grant Archibald confirmed that negotiations had fallen through when the parties disagreed on terms. "The airport offered us an extension if we would renegotiate terms. It wasn't a standard negotiation for an extension, they were also seeking to change the conditions of the current contract five years before it expired."

"The airport is a private entity and has a responsibility to get appropriate recompense from its tenants," said the source. "The fact that it has attracted bids from several of the region's leading retailers suggests that the airport's view of what was appropriate was more realistic than the incumbent's."

Another source cast doubt on the suggestion that Duty Free Stores' business at Wellington would become unprofitable if it faced competition at the airport. "If the rent is so low that it makes commercial sense for the airport to seek another concessionaire for two years, I can't imagine it would be crippling even if Duty Free Stores lost 50% of their sales."

The dispute will go to arbitration in mid-March, with a decision expected by the end of the month.

Wellington airport and The Nuance Group were unavailable for comment as the news broke.

Bookmark This Article

• • • •

Delicious Digg StumbleUpon Facebook