Duty free opportunity arises as Saipan Airport master concession goes to tender

Duty free pioneers

DFS, then Duty Free Shoppers, played a pioneering role in the creation not only of airport duty free on Saipan but of the airport itself.

In the 1970s, Saipan became popular as a place of emotional pilgrimage for Japanese tourists visiting nearby Guam. During the Battle of Saipan in 1944, of 30,000 Japanese troops who fought against the US military, just 921 survived. The rest were either killed by American forces or by throwing themselves off Marpi Point, dubbed Banzai Cliff, in mass suicide rather than face the ignominy of surrender.

Despite the fact that it was near Guam and just three hours away from Japan, Saipan only had a basic coral airstrip and a tiny wooden terminal building.

DFS, buoyed by its success in Guam and other Japanese tourist destinations, invested US$5 million in a new airport and received a long-term duty free contract in return. In return for the upfront fee it did not have to pay a concession fee in the early years.

MARIANA ISLANDS. The Commonwealth Ports Authority (CPA) is to issue a Request for Proposals (RFP) for the master commercial concession at Francisco C. Ada/Saipan International Airport.

The incumbent is DFS Saipan Ltd, part of global giant DFS Group.

The concession covers post-security commercial facilities at the Saipan gateway. The successful bidder will have the exclusive right to sell duty free merchandise and other items, including food & beverage [For more information, visit the Business Opportunities section on CPA’s website at http://cpa.gov.mp/business/cns.asp]

DFS Saipan and its predecessor company Duty Free Shoppers have run the current master concession since 1985 when Duty Free Shoppers entered into a 20-year agreement. That agreement was subsequently extended until 2015. Since then the business has been run by DFS on a month-by-month basis – a period in which the CPA has weighed the merits of issuing a new RFP or renegotiating with DFS.

As reported, the CPA decided in September 2015 to issue an RFP but later postponed that call. The business has been badly affected in recent years by natural disasters that have hit the Mariana Islands, including  Super Typhoon Soudelor in August 2015 and Super Typhoon Yutu in October 2018.

The funds from the master concession will form a vital component of the CPA’s US$121.2 million investment plan for the airport, including an estimated US$25 million for repairs due to Yutu’s devastation.

Besides its airport business, DFS also operates a T Galleria on Saipan.

What’s up for grabs?

The concessionaire will also have the exclusive right to provide services such as vending, for-fee departure lounges, currency exchange, automated teller machines, postal services, telephones, and luggage carts.

Additional non-exclusive rights cover massage services, cell-phone charging stations, and wireless communications. The concession excludes advertising, gaming, automobile rental services, and automobile insurance services.

Bids will be evaluated on the following basis:

Proposed Concession Fee: 30

Improvement of the Airport infrastructure: 25

Attractiveness of the proposed duty free programme: 10

Ability to deliver the proposed duty free programme: 10

Attractiveness of the proposed food & beverage programme: 10

Improvement of the airport passenger experience: 10

ACSBE participation: 5

NOTE: The Moodie Davitt Report is the industry’s most popular channel for launching commercial proposals and publishing the results. If you wish to promote an Expression of Interest, Request for Proposals or full tender process for any sector of airport revenues, simply e-mail Martin Moodie at Martin@MoodieDavittReport.com

We have a variety of options that will ensure you reach the widest, most high-quality concessionaire/retailer/operator base in the industry – globally and immediately.

Similarly The Moodie Davitt Report is the only international business intelligence service and industry media to cover all airport consumer services, revenue generating and otherwise. We embrace all airport non-aeronautical revenues, including duty free and other retail, food & beverage, property, passenger lounges, car parking, hotels, hospital and other medical facilities, the Internet, advertising and related revenue streams.

Please send relevant material, including images, to Martin Moodie at Martin@MoodieDavittReport.com for instant, quality global coverage.

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