Saudi Arabia launches airport duty-free tender

John Rimmer

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The long-awaited move to tender duty-free at Saudi airports has begun, with Concession Planning International appointed to advise the government

Saudi Arabia's General Authority of Civil Aviation has launched a tender for the establishment, operation and management of duty-free stores at the country's key airports. The long-awaited move has been made in partnership with consultant Concession Planning International, which will advise GACA on the tender process and appointment of the winning candidate. The tender concerns Saudi Arabia's three biggest airports, at Riyadh, Jeddah and Dammam.
 
GACA president HE Abdullah Rehaimy said: "The establishment of a dynamic duty-free business in our international airports provides GACA with an exciting opportunity to widen the commercial choice and services we offer to the 12.5m international passengers [excluding Hajj traffic] using our airports every year. With CPI's support GACA is committed to the creation of visually stunning duty-free facilities that will rival the best in the region."
 
CPI managing director Frank Gray added: "We are delighted to have been appointed by GACA to set up a completely new duty-free business in a part of the world which is seeing substantial traffic growth and at a time when the economy of the kingdom is booming."

A single 10-year contract is on offer for all three airports, and bidders will be required to offer a percentage of sales or a minimum annual guarantee, whichever is greater. International bidders must form a partnership with a pre-qualified Saudi company to meet the conditions of the request for proposals. In turn, local companies will be required to form a partnership with an international operator to fulfil the requirements of the technical bid.

Pre-qualified companies will receive a request for proposals package on receipt of SR60,000 ($16,000). The deadline for responses to pre-qualification is 1700 (Jeddah time) on Wednesday May 24. Responses are required in English. 

The successful company will finance and build two stores in Jeddah, two in Riyadh and one in Dammam. A duty-free bonded warehouse will be built at each airport. GACA said it expected to sign a contract with the winning bidder by mid-October 2006.
 
The tender is bound to attract the interest of all the Middle East's leading retailers. Aer Rianta International-Middle East has long monitored the potential for duty-free in Saudi Arabia and has registered its interest in the market. Dufry Group, Aldeasa, Chalhoub Group and James Richardson will all study the opportunity closely.
 
The potential for duty-free sales in Saudi Arabia is huge even though liquor will not be available at the country's airport stores. The vast numbers of pilgrims visiting the country's holy sites guarantee strong traffic, while the country's wealth is such that airport investment is likely to be considerable. 

GACA has invited interested companies to obtain a request for qualification document by contacting GACA director general Fouzi Fathaldin on tel: +966 640 0771 or fax: +966 2 685 6086; or CPI's Gray on tel: +44 7748 653 737 or email frankgray@concession-planning.com.