A YEAR IN TENDERS


Incheon Airport Terminal 1 tender saga rolls on in virus-ravaged 2020


The sense of frustration felt by airport operators in conversations with TRBusiness this year has been palpable, as the coronavirus (Covid-19) pandemic has ruptured commercial revenues and, in many cases, affected clear pathways to issuing bid terms for new tenders. Luke Barras-Hill provides a selection of tender highlights during an unprecedented year.


A


s this publication went to press, Airports Council International (ACI) World


published updated projections on the collateral damage to airports in 2021 with a forecast $111.8 billion reduction in revenues. This is due to the torturous impacts of Covid-19. In turn, pax numbers are projected


to drop by more than six billion (-64.2%) in 2020 (versus the pre-Covid forecast for the year). At Seoul Incheon International


Airport in South Korea, the beleaguered pax situation this year interfered sharply with the much- vaunted Terminal 1 duty free tender. Having launched in January, six packages (four general enterprise; two small and medium-sized enterprises) covering 33 shops and 6,131sq m returned to the market twice after failing to tempt bidders. The five-year leases (extendable


by five years) concern perfume & cosmetics (DF2); liquor, tobacco and food (DF3, DF4); fashion/misc (DF6); and all items (DF8, DF9). To complicate matters, The


Shilla Duty Free and Lotte Duty Free withdrew their preferred bidder statuses for the two L&T concessions (DF3 and DF4) earlier in the year. Meanwhile, both have been locked in protracted rental discussions with landlord Incheon International Airport Corporation (IIAC). The parties agreed to flexible rent arrangements for the existing L&T concessions in July. When the breakthrough came,


the prospect of a retender of the six lots looked unlikely given the parlous climate. However, a second fresh tender was launched in August with new, flexible conditions attached to


DECEMBER 2020


concession payments, including the removal of the MAG threshold and a decrease in the estimated rental fee by around 30%. After receiving insufficient bids,


IIAC launched a third tender in October. Discussion in industry circles at the time centred on the prospect of direct negotiations with operators should the RFP fail once again. Updating TRBusiness, an IIAC


source said the operator was in internal discussions regarding the next steps. This was after sending an official letter to 10 operators regarding direct negotiations, which appear to have fallen on deaf ears. “We are not considering direct


negotiations again,” commented the source. “The tender is not determined yet. We finish internal processes this month (December) to see if anything changes.” While it remains too early to


speculate on the outcome, a decision on the path forward is expected early


next year, TRBusiness is led to believe.


China ups activity As airlines across regions began to slowly pickup from the second quarter of this year, albeit with severely curtailed load factors, airport operators began to entertain the idea of issuing new bid opportunities. In Asia, the China National


Service Corporation For Chinese Personnel Working Abroad (CNSC) continued its impressive run of contract victories by picking up the departures duty free concession at Guiyang Longdongbao International Airport. This followed swiftly on the


A decision on the path forward regarding the Incheon Airport Terminal 1 duty free tender is expected to be made early next year.


TRBusiness TRBUSINESS 21


Above: Lotte Duty Free withdrew its preferred bidder status for the Incheon Airport Terminal 1 liquor & tobacco concession (DF4) earlier this year.


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