IRELAND. Aer Rianta International’s (ARI) share of after tax profits from its operations and joint ventures outside Ireland increased by +11% year-on-year in 2016 to €24 million. Profits from its retail operations alone (excluding ARI’s 20% stake in Düsseldorf Airport) climbed by a robust +17%.
The performance was driven by strong like-for-like sales growth and an improvement in gross margins, said parent company DAA in its annual report.
In Ireland, sales at The Loop, Dublin and Cork airports in 2016, including retail and food & beverage sales by concessionaires, amounted to €302 million. This marked an increase of +11% on 2015 and was buoyed by healthy growth in passenger volumes.
Sales at ARI’s directly-operated stores in Ireland increased by +10% in the same period.
(Note: The DAA does not provide separate profit figures for ARI’s operations in Ireland, which are incorporated in the overall performance of the group.)
ARI’s retail business in Cyprus (CTC- ARI) – at Larnaca and Paphos airports – recorded an improved sales performance driven by an increase in Russian passengers to the island.
ARI’s joint venture at Delhi International Airport delivered strong sales growth with revenues exceeding US$146 million in 2016, from US$140 million a year earlier. Operations in Canada and Barbados also saw sales grow in 2016, while the first full year of operations at Auckland Airport performed “in line with expectations”.
ARI’s operations in the Middle East continued to perform well despite ongoing political instability in the region and hand baggage restrictions to certain countries.
“I’m very pleased with the group’s overall performance in 2016 in both our home and overseas markets,” said ARI CEO Jack MacGowan. “Despite a number of external challenges we demonstrated great resilience in driving continued profit growth. This was underpinned by a clear focus on our strategic goals to improve profitability and expand our retail estate by winning and seamlessly implementing new contracts.”
As reported, in early 2016 ARI retained the duty free concession at Muscat International Airport for ten years. The new contract begins in late 2017 once the airport’s new terminal is completed. In addition, ARI also won the contract to operate a number of speciality stores at the airport.
In partnership with a local company, ARI also won the tender to operate the duty paid concession in Terminal 5 at Riyadh King Khaled International Airport, Saudi Arabia. The seven-year contract is expected to begin later this year.
In Indonesia, ARI’s local partner was chosen as the preferred bidder to operate duty free shops at the new Terminal 3 Ultimate facility at Jakarta Soekarno-Hatta International Airport, which should open later this year. Subject to final contractual negotiations and due diligence, ARI may take a stake in this business.
ARI noted its capture of some major awards during the year. ARI North America (ARINA) won Best Canadian Airport Duty Free Company at the 2016 Frontier Duty Free Association Gold Standards Awards. It also hailed ARI Ireland’s top ranking in The Moodie Davitt Dreamstore 2016 report (for fragrances & cosmetics) at Dublin T1.
MacGowan added: “Retaining the key Muscat Duty Free contract alongside our success in acquiring the duty paid concession in Terminal 5 at King Khaled International Airport in Riyadh strengthens our position as the leading multi-location retailer in the Middle East. We are also making good progress on our ambitious plans for the P&C, sunglasses and fashion jewellery outlets at Abu Dhabi International Airport’s new Midfield Terminal.”
He added: “I was also delighted to receive the recognition of our industry peers for the Moodie Davitt Dreamstore 2016 award for Dublin Airport T1 and the Best Canadian Airport Duty Free Company. Winning two such prestigious accolades once again reinforces the success of our customer-centric, tailor-made approach in consistently delivering great shopping experiences.”
Passenger numbers at Düsseldorf Airport increased by almost +5% to 23.5 million last year. ARI’s shareholding there continued to make a positive profit and cash contribution to ARI, noted the company.
DAA results
At ARI parent DAA, profits after tax increased by +75% to €108 million last year due to “growing passenger numbers at home and abroad, improved commercial income and the impact of new overseas businesses”.
Turnover increased by +17% to a record €793 million, with aeronautical and commercial activities showing good growth, noted the company. EBITDA increased by +20% to €247 million for the year.
Overall passenger numbers at Dublin and Cork airports increased by +11% to a record 30.1 million in 2016. Passenger numbers at Dublin, the key Irish gateway, increased by +11% to a record 27.9 million, helped by 19 new routes and additional capacity on 31 existing services. Dublin was the fastest-growing major airport in Europe last year, as its traffic grew at more than twice the European average.
Cork Airport passenger numbers increased by +8% to 2.2 million due to six new routes and increased capacity to sun destinations and a number of provincial UK cities.
In the first four months of this year traffic at both airports continued to grow, as Dublin traffic increased by +7% to 8.3 million and Cork passenger numbers increased by +2% to 602,000.
The +38% growth in traffic at Dublin Airport since 2013 is putting pressure on some areas and DAA is currently investing about €100 million per year in capital expenditure to maintain, expand and improve facilities.
“We’re investing in Dublin Airport for both for our airlines and our passengers,” said DAA CEO Kevin Toland (who has announced he will leave the company later this year). “We need additional aircraft parking stands, boarding gate areas and runway capacity and we’re working in each of these areas. We also have a major maintenance and upgrade programme underway.”
An extension to the Pier 1 boarding gate area opens later this month and in the autumn another new boarding gate area will open to the south of Terminal 2. “These new facilities will deliver nine extra boarding gates this year on top of the six new gates that were brought into service last year,” Toland added.
DAA is also investing in Cork where a €4 million upgrade will deliver a new security screening lane, a major revamp of the airport’s cafés and restaurants and a new fire training area.
