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India’s Bengaluru Airport Ties Up 15-Year Retail Joint Venture With Dufry

Global travel retailer Dufry will operate the duty-free shops at South India’s busiest airport under a newly agreed joint venture that is scheduled to start on April 1, next year. The deal was struck after the operator of Bengaluru Airport—the gateway to India’s technology hub—issued an open tender in November 2021 which Dufry won.

The Switzerland-based retailer will partner with the operator, Bangalore International Airport Limited (BIAL), in a 50:50 joint venture with a 15-year contract to operate and manage duty-free outlets in the airport’s new Terminal 2.

Dufry, which has seen strong growth in Q3, already runs duty-free shops at Bengaluru Airport—the full name is Kempegowda International Airport—and has done so since 2008 through its subsidiary Nuance. The new deal secured the retailer’s position at the new T2 where works are meant to finish by the end of the first quarter in 2023. A Dufry spokesperson told Forbes.com: “All international flights will be migrated to this new terminal.”

BIAL describes the new T2 as a ‘terminal in a garden’ thanks to the greenery of the complex which includes planted walls, hanging gardens, artificial waterfalls, and outdoor gardens surrounding a lagoon. The building—which will be officially inaugurated by India’s prime minister Narendra Modi on November 11—will boost Bengaluru Airport’s passenger capacity by 25 million annually, in the first phase of the project. An additional 20 million will be added in the second phase.

From a retail perspective, the capacity boost promises a steady increase in passengers in the coming years. In the 12 months to March 2022, Kempegowda International was the third busiest airport in India handling 16.3 million passengers, and between April and October this year, it processed almost 17 million of which two million were international.

A JV to spur luxury, fashion, and beauty

Dufry’s contract covers almost 40,000 square feet of retail space spread across international departures and arrivals in the new terminal. The joint venture is not restricted to core duty-free shops and allows the possibility for Dufry to look at introducing luxury boutiques and other formats. A spokesperson said: “Further developments and extension of the contract within the JV are possible.”

Given that both BIAL, the airport operator, and Dufry are sharing the risks and rewards, it should be easier for the Swiss retailer to move forward with new retail concepts so long as they are commercially viable.

In a statement, Dufry’s chief operating officer for the Mediterranean, Eastern Europe, and Middle East regions, Alberto Iglesias, said: “We are committed to providing passengers with an enhanced shopping experience and featuring a considerably extended product assortment.”

For its part, BIAL seems happy to deepen its longstanding relationship with Dufry in a new terminal that is expected to wow Indian travelers. The airport’s chief commercial officer, Kenneth Guldbjerg, said: “We will benefit from Dufry’s expertise to take the airport’s shopping experience to an entirely new level. He added that, through the JV, the airport was looking to up its game across several categories “especially in luxury fashion, beauty, and confectionery.”

This is not Dufry’s first airport JV. The travel retailer works in similar partnerships in Milan Linate Airport, Sharjah in the UAE
UAE
, and across several U.S. airports where ACDBE cooperation is often a legal requirement. Airport owners have increasingly been moving towards joint ventures with retailers over the years to pocket more revenue. Other examples include Heinemann and Fraport at Frankfurt Airport; and Lagardère Travel Retail at Paris Charles de Gaulle and Paris Orly airports.