The Nuance Group CEO Europe Carlo Bernasconi: “We calculated it was a very tough business plan, right on the edge of the acceptable level, but we matched their [TBI’s] requirements.”
SWITZERLAND. The Nuance Group has commented on its failure to secure a new duty free contract at London Luton Airport, saying it is disappointed at the loss but, equally, is not prepared to pay more than a contract is worth.
As revealed by The Moodie Report this morning, airport owner TBI Group has appointed French travel retailer Aelia to the new contract which begins in January.
The Luton contract did not go out to tender. The Moodie Report can confirm that TBI held discussions with both Aelia and Alpha Airports Group, eventually reaching agreement with the French retailer (which has also picked up the duty free contract at fellow TBI airport, Belfast).
Nuance Group CEO Europe Carlo Bernasconi explained the background today to The Moodie Report. “Our contract at Luton expired at the end of March and we had discussions with TBI about a prolongation as there were some uncertainties about the performance of the business post the European Union enlargement.”
This resulted in a six-month extension, which expired at the end of September. TBI then asked Nuance to make an offer on Luton, involving a specific rent per passenger and a specific guarantee. Bernsaconi said Nuance met these numbers though they were extremely demanding. A new agreement at Luton was seen at the time as a bargaining chip in return for losing Belfast Airport short of the contract expiry in 2007.
“We calculated it was a very tough business plan, right on the edge of the acceptable level, but we matched their requirements,” he said.
However, Bernasconi says TBI then raised its demands to a level some 20% higher – a level Nuance felt was unsustainable.
“As the contract has now finished, we have agreed a handover and I wish Aelia good luck,” he said. “If they have matched TBI’s increased expectations it will be a very tough contract. I am of course disappointed about being asked for a specific and high number [agreeing it] and then not being awarded the business.”
Bernasconi said the company is presently preparing its legal case after the premature termination of its Belfast contract but as the matter is highly sensitive preferred not to go into details. Luton had been “brought into the game” during the Belfast discussions as a “kind of trade-off”. In the end, that trade-off never happened.
Alpha, too, held discussions with TBI and made an offer. It was told that its offer was not sufficient and declined to raise it.
NOTE: In the most recent issue of The Moodie Report print edition, The Nuance Group CEO Roberto Graziani outlined the company’s attitude to concessions and the fact that it is no longer prepared to work on unsustainable business terms. To access this compelling interview, click here .
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